The article shows that the evolution of economic systems is accompanied by the transformation of institutional forms and mechanisms. Institutional transformations are taking place in a stream of cultural and national changes under the influence of globalization. However, institutions are subject to the principles and imperatives of economic interaction and should a priori ensure their implementation in economic practice. An assessment of the institutional transformation of the economic system for its compliance with the new rules of interaction in the economic environment is necessary to ensure sustainable socio-economic development. The effectiveness of the state's economic policy depends on the degree of adequacy of such an assessment to the real conditions of the functioning of the national economy. The welfare state is incompatible with an economic model based on competitive principles, and its institutions will not allow the implementation of the principles of functioning inherent in this model. Consequently, while maintaining institutions, the economic model is subject to replacement and, accordingly, vice versa. But the choice of an economic system is a fundamental element of a democratic society, which cannot be dismantled to ensure the sustainable functioning of existing institutions. Otherwise, this is a direct path to authoritarianism. It becomes obvious that institutions, especially newly emerging ones, need to be examined for their compliance with the economic model adopted by society.