The idea of an institution is based on the fundamental principle that man is culpable. This is the impression I got after reading Michel Foucault's 'Madness and Civilization'. This principle is itself founded on lack of faith and ultimately what dictates man is fear which is at the core of his existence. On a broad plane we cannot trust anyone completely if we exist as a system. I am not saying that Foucault holds the fundamental principle of fear as the basis of institution. He said a lot more about the neutrality of institution than the revelations of unreason.
The principle of culpability is why there is an institution and not just because some people need training. In an institution there are more rules than in the "outside world". In an institution there is no adult. We cannot trust anyone completely if we exist as a system is proved by the nature of existence of an institution and the denial of the rights of adulthood by it. We exist only as a system because we are scared of existing as individuals. Foucault did not go too deeply into how rules interfere with spontaneity and creativity. But the fact of the matter is that the birth of an overwhelming institution can kill individual spontaneity and creativity.
Despite the fact that unreason dominates some "unfortunate" individuals, they need not take themselves to be unfortunate because what they experience spurs them to a new way of living. In a society where people talk about luck and appropriate attitude they lead monotonous lives of absent creativity which they do not even realize in their subconscious states because there is no awareness of their second nature. There are flashes of spontaneity but that is also because they do not have to be conscious of their second nature. So, a new way of living is practically written off and competition, appropriate attitude etc. rule their lives. The institution that Foucault talks about exposes its drawbacks as a correcting mechanism. But there is a broader realization which is absent in the outside world and in the institution and it is the new way of living which is rendered as impossible by the demands of economy and the constraints imposed on the common man by the promises that achievements have to offer that lead to a neurotic state of mind.
A man is promised a high paying job provided he studies better than his peer candidates and proves himself which is itself the root cause of misery. Since this expectation is foolproof there is no possibility of a new way of living that economy can afford and the man of dreams suffers the consequences of having dreamt too much. Creativity is not always applied but the chance to express oneself in ways not known before is an exploratory process that opens new doors. This exploration is what the institution can potentially curb and care must be taken to not enter the inner life of the suffering individual while attempting to correct the neurotic state of confusion. How is one to assure the sufferer that he is taken to the path outside the new door in a system that is stagnant? The only way that is possible is by not taking away from him his passport to an inner world where only he can make authentic choices.