The study's objective was to examine the interrelationships of education and other social institutions of Malaysia's transitional society to understand those conditions which facilitate, or impede, the formal educational institutions' effectiveness as an agent of directed social change, especially regarding national integration and shared identity. A chief concern was the relationship between the educational system's assigned functions of socialization and mobility management. The paper is based principally on a study of the "institutional effect" of the secondary schools on the students' diffuse values, concentrating on the institutional features lying largely outside of the school's own sphere of control and which constitute its relationship with the larger socio-cultural system. Sections of the paper are: 1) The Schools as Institutions of Social Exchange; 2) Societal Constraints Upon the Exchange Value of the Educational System; 3) Malaysia as the Research Setting; 4) The Research Design, Data, and Analysis; 5) the Civic Attitudes of Malaysian Secondary School Students; 6) Testing for Antecedent Causation; 7) Communal/National Student Identification; 8) Alienation and Ethnic Distrust; 9) The Influence of Institutional Characteristics; and, 10) Mobility, Inconsistency, and Alienation. One conclusions is that national integration is impeded by the view that the schools are not an effective exchange system. (Author/DJB)