The inquiry into the fundamental factors driving societal progress or stagnation has long been a central issue in social and economic thought. In contemporary literature, New Institutionalists, such as Douglass North and Daron Acemoglu, have sought to explain the success or failure of societies by elucidating the functions of institutions and establishing a link between the quality of political and economic institutions and developmental outcomes. In contrast, Martyr Sadr, through a historical and analytical lens, offers a distinct theory of social progress and transformation, centered on the pursuit of justice, public participation, and communal leadership.

This paper aims to elucidate and comparatively analyze these two approaches. Utilizing an exploratory method with an analytical-comparative framework—based on an in-depth study of the primary works of these thinkers—the research findings indicate that, unlike New Institutionalists, Martyr Sadr views institutions as inherently value-laden and ideological. He argues that without evaluating institutions based on a comprehensive school of thought and the criterion of justice, one cannot make objective judgments about their effectiveness or legitimacy. From his perspective, New Institutionalists presuppose liberal capitalism and assume its institutions to be essential for development, whereas, according to Sadr, the evaluation of social systems based on justice must precede the assessment of individual institutions.

Furthermore, Sadr identifies the primary catalyst for societal transformation or decline in “human inner transformation” and the “alignment of the Ummah (community) with the school of thought,” rather than mere elite management, social pressures, or critical junctures. Within this framework, in contemporary Iran, the institution of Velayat-e Faqih (Guardianship of the Jurist), the constitution based on Islamic jurisprudence, and the politico-legal structure that has fostered public alignment with the Islamic system have provided an institutional foundation for progress. This has enabled the country to move beyond the vicious cycle of dependency and backwardness characterizing the pre-revolutionary era, thereby charting a path distinct from secular models. Ultimately, Martyr Sadr’s theory of progress, with its religious, ethical, and justice-oriented foundations, presents a fundamental critique of New Institutionalism and its secular functionalism, offering a viable alternative model for Islamic societies on the path to development.