D.1. Causes of Progress of Welfare:
I. Since Causal Order of Goods is subject to uncertainty of quantity and quality of first order goods i.e. possibilities of gratification and thwarting human needs are positive, progress in welfare is possible only by mitigating these uncertainties which demands extension of our knowledge and control of useful properties of goods.
II. All progress in welfare of mankind can be attributed to the expansion of knowledge and control in attempts to mitigate uncertainty of quantity and quality of final outcomes, and division of labour, unlike Smith's Hypothesis, is only a by-product.
Axiomatic Derivation:
1. Definition of the Welfare: Welfare is Need Satiation with certainty given any set of human needs.
1.1. The Primacy of Need Satiation holds True.
1.2. The Primacy of the Uncertainty holds True.
1.3. The 1.1 and 1.2 implies Need Satiation with certainty given any set of human needs is the most desirable.
1.4. The aforementioned is named as Welfare.
2. Claim 1: Division of Labour causes Welfare.
2.1. From Primacy of the Uncertainty, weakness of knowledge implies uncertainty of need satiation i.e. it negates welfare with a probability.
2.2. Observation: Division of Labour decreases the uncertainty of need satiation to only a minor degree. However, neither itself is any motive to improve knowledge, nor it offers the why, and how i.e. the reasons and form of division of labour.
2.3. Division of Labour, following 2.2. does not imply knowledge expansion, or correction etc etc.
2.3.1. On its own the Division of Labour offers neither incentive to research nor direction of knowledge acquisition.
2.4. Division of Labour, following 2.3, can not mitigate weakness of knowledge.
2.5. Division of Labour, following 2.1 to 2.4, perpetuates negation of Welfare.
2.6. Perpetual Negation of Welfare is perpetual negation of Need Satiation.
2.7. Perpetual negation of Need Satiation is impossible (See 1).
3. Division of Labour, in absence of motive or direction for gathering or perfecting knowledge, thwarts Need Satiation when knowledge is weak and uncertainty of future Need Satiation exist.
4. Claim 2: Increased knowledge for mitigating uncertainty of Need Satiation results in Welfare.
4.1. The Primacy of Uncertainty implies negation of Primacy of Need Satiation (with probability increasing in weakness of Knowledge).
4.2. Negation of Primacy of Need Satiation is impossible.
4.x. Negation of negation of Primacy of Need Satiation implies Negation of Primacy of the Uncertainty.
4.4. The 4.x supplies a definite motive, and direction for knowledge acquisition.
4.4.1. It provides a motive which is lowered uncertainty, and a direction i.e. sphere of production which requires uncertainty mitigation.
4.5. Observation: The research as in 4.4 can result in discovery of new Useful Things, or new Useful Human Actions (See Relations) using the same existing Useful Things.
4.5.1. The discovery of new useful things demands new control (Recall Control defines Goods), and control is just a useful human action. The other discovery is already a useful human action. In any case, it results in new actions to be performed by men.
4.6. The Knowledge acquisition implies reduced weakness of knowledge.
4.7. Reduced knowledge weakness implies reduced Uncertainty of Need Satiation.
4.8. Reduced Uncertainty of Need Satiation implies Improved Welfare (or movement towards welfare since uncertainty has a primacy and seldom zero).
4.9. The 4.5 implies further divisions of labour.
4.10. Following 4.9, Division of Labour is by product of improved welfare, and following 4.8 improved welfare is consequent of improved knowledge for mitigating uncertainty.
Explanations:
E.1. From The Primacy of Time, it follows that preparation for the future needs is inevitable, and thus our current welfare depends upon our previous preparations.
E.2. From The Primacy of Uncertainty it follows that our preparations for future are marked with uncertainties, and that the only way to mitigate them is by expansion of knowledge and control.
E.3. From these two it can be deduced that the certainty of our future welfare depends upon our knowledge and control we have of the production processes - process of transforming the raw provisions of nature into goods for final consumption.
E.4. Accordingly, it can be further deduced that all the progress in welfare of mankind can be attributed to the expansion of knowledge and control in order to mitigate uncertainties. However, this is somewhat contrary to the popular proposition by Adam Smith that welfare of a nation results from increased divisions of labour. Menger, however, has a view that is contrary. He recognizes the usefulness of division of labour, but places it as a consequence of our attempts to increase knowledge and control in order to mitigate uncertainty.
E.5. Contrary to Adam Smith if we move from a position of Menger we can present a more consistent picture without aforesaid gaps, which explains progress of welfare and also predicts division of labour.
A division of labour is a managerial technique which only increases the output using the given state of technology. However, it does not by any interpretation implies innovation. In absence of innovation, and in use of old methods, we do face the same uncertainty i.e. we are still vulnerable to the random externalities of nature. With everyone performing only one specialized activity, everyone manages his or her own labour efficiently, reducing their own errors but by no measure anyone attempts to engage in research in absence of a motive. Where does this motive come from? This is the central proposition of Menger.
Let us ask ourselves, does a division of labour imply development of ways to predict weather conditions? Or to mitigate impacts of a weather calamity? Or to improve methods for storing our foods for a longer time? Or or to protect farms from pests? or to heal sickness whose medicine yet does not exist etc etc?
E.6. Let us proceed from Menger's position:
Since knowledge and control are two of four defining variables of a good, and since it is goods (including human actions - See Relations) which gratify, either directly or indirectly, human needs, it is expansion of knowledge and control which can expand the number of goods available for our gratification of number of needs, and thereby increase welfare.
The awareness of this dependency of good character of things on our knowledge and control has always been there with mankind, it may be considered as intuitive. Moreover, the inverse relation of uncertainty of future outcomes and knowledge and control too is what we have learned so often it is intuitive for anyone. Thus, these two require little evidence, or logical derivation.
For instance, using primitive techniques of agriculture there is more uncertainty of outcomes; Because we cannot predict nature we are at full mercy of random externalities of whether (less knowledge), and our poor means to mitigate negative impacts shall an adverse contingency arise (less control) means we are further at the mercy of randomness. All of this implies we have increased uncertainty, or in the jargon of Causal Order, the weakness of our knowledge and control at any level of order increases uncertainty of the quantity and quality of first order goods we will have in future.
Put in a more familiar terms, our knowledge and control of production processes from excavation of raw materials to development of the final goods determines how vulnerable or immune to forces affecting these process are we. (See Primacy of Uncertainty for details)
This uncertainty means we may or may not have as much as we need, and accordingly, pain is a possible outcome. The lesser the knowledge or control, the more the possibility of pain in future, the more the pain the more undesirable our future is, and accordingly the stronger the impetus to mitigate this pain, and thus reduce this possibility or uncertainty and accordingly increase our knowledge and control.
In our attempts to mitigate uncertainty, or pain due to it, we gather more knowledge of forces affecting production processes and devise ways to predict contingencies, and prepare for the adverse. With expansion of knowledge and control the results are only two;
First, it is possible that we may discover resources previously un-used, i.e. more of existing Useful Things now become Goods (See Goods and Useful Things).
Second, it is possible that with our expanded knowledge of forces of nature affecting production, we may devise methods to extend our control over them. These new methods are essentially new Useful Human Activities which result in new Goods (intermediate goods or final ones) using existing raw materials or newly discovered ones all for mitigating our uncertainty of gratification of future needs.
Each of these new activities is a new process requiring previously non-existing Useful Human Actions (See Relations). These new actions establish new relations among members of society, and since these are additional actions, these are divisions of labour. But this time, it is not a cause of progress but a consequence of a much broader project of man to mitigate uncertainty associated with gratification of the future needs.
E.7. Accordingly we can view in a more logically consistent, and economically meaningful manner, all developments as we move from primitive caveman to early stage agriculture to more sophisticated agriculture to early stage industrialization to more recent developments; These were all our responses to uncertainties of outcomes we ever experienced, and since uncertainty implies pain, we strived to devise ways to mitigate this pain, and with our each triumph over uncertainties, we devised new relations or useful human actions, and at once progressed further in terms of welfare. These new processes might or might not have been additional layers in Causal Order of Goods, but they were divisions consequent of methods to mitigate uncertainty of quantity and quality of first order goods, and in so doing we have over centuries increased our welfare, and will continue to do so.
E.8. See __ for a more elaborate exposition of the position of Menger.