In the mid to late 19th century a great break in human development occurred. For the first time in recorded human history a few societies began to experience steady increases in material income and wealth. This paper develops a theory of rules and organizations to better understand key features of the development process that began to occur in the mid-19th century. Those features have not spread widely throughout the world since the mid-20th century. They include impersonal rules that apply to all citizens, political and civil rights, rule of law, open elections, and long lived stable political parties. Perhaps lacking these institutions and outcomes, as a result, most societies in the world are still “undeveloped” or “developing” economically and politically. The theory shows how a complex of institutional changes in the “developed” societies enables a few societies to support much deeper, denser, and coordinated networks of organizations.