The Purpose of this study is to demonstrate Utilitarianism could be improved by justifying institution. Utilitarianism has been treated as individual action guide rather than general principle. Most moral theories including Utilitarianism that regard the individual agents as the only moral decision maker can be evaluated as impractical. Unlikely people commonly believe, Bentham and Mill who stand for classical Utilitarianism have an interest in protection of basic human rights and maximization of general utility. Utilitarianism has performed not only as a moral theory but also as the idea that justifies the institution which is designed in British industrialization. Especially, in the light of the aim of Mill's 'Principles of Political Economy' and 'On Liberty' Utilitarianism seems to emerge in order to assert the necessity of nation's intervention for effective distribution. Therefore, Utilitarianism should be reviewed in relation to the economic policies which is introduced to bridge the gap between the rich and the poor in 19th century British. Utilitarianism has been criticized for its unrealistic human nature in seeking greatest happiness. It might come from the limits of classical Utilitarianism that depended on individual ability and charity. Utilitarianism as consequentialism can't reach the best outcome for limit of reason and indeterminacy based on strategic interaction. It is expected that Utilitarianism can be realized when it build on the strategic interaction between agents. Utilitarianism as a moral theory should prove the possibilities that individual liberty and social goods can be reconciled without inconsistency. Institutional Utilitarianism should be considered with traditional one that emphasizes the internal motives as a moral obligation.