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2.1.10. Causal Order of the Goods.

D.1. Causal Order of the Goods: 

I. For analysis, all goods are sorted in a Causal Order, with first order of goods being those necessary for gratification of human needs i.e. they cause the need gratification, and second order goods being those which are necessary for production of first order i.e. they cause the first order goods, and likewise subsequent higher orders of goods. 

II. The order in which raw provisions of nature are transformed, often successively, into final goods which can cause the transition from need to satiation in humans is Causal Order of Goods. 

Axiomatic Derivation:

1. Observation: Neither are Provisions of Nature most frequently provided to Humans in consumable form which can satiate Human Needs, nor are Provisions of Nature provided with certainty for each instance of any Human Need to any Human.

2. Both of the points in 1 imply frequent instances of opposition of Primacy of Need Satiation, and since its opposition is impossible, Humans strive to solve this contradiction.  

3. The 2 implies two Needs: First a Need to process and transform provisions of nature into things with Good Characters, and second a Need to mitigate this uncertainty of provisions of nature. 

4. The 3 implies that useful things with Good Character ought to exist to satiate these two Needs which are now most frequently the necessary requisites for satiation of our Human Needs. 

5. The 4. implies an Order of Goods where some Goods must necessarily exist before Goods which can satiate our Human Needs can exist. 

6. In other words, there are now Goods which Cause Consumable Goods to exist, and Consumable Goods which Cause Satiation of Human Needs directly upon consumption.

7. The 6 implies now a Causal Order of Goods, or Causal Order of Good Characters exists. 

8. Observation - I: Ordering: 

In a Causal Order of Goods, for analysis, we place the consumable Goods at first order, and goods required to develop them as second order, and subsequent higher orders in the same manner. Each Causal Order of Goods satiates a human need, and can be composed of many higher orders. All higher order goods are necessary for the solution of problems in 1 given a human need. 

9. Observation - II: Accumulated Knowledge:

Since each higher order Good is a Good, it is a composite of a Need, Useful Things, Knowledge and Control. 

Since the entire Causal Order is the solution to two problems in 1, at any higher order, the Need is in fact the existence of the immediately lower order good, save the case of first order where Need is a Human Need.

For the same reasons above, at any given higher order, the Useful Thing is in fact the existence of the immediately higher order Good which is transformed into Good of that given order for satiation of Need of immediately lower order. 

Accordingly, at the first order, we observe an accumulated knowledge, and control of man for satiation of their Needs in response to 1 problem.

INSERT SCHEMA ____ (To be appended later)

Thus, when we eat, drink, wear clothes, or even read a book, we shall observe a large accumulation of Human Knowledge over centuries aimed at solution of the two problems and implemented at the time of creation of the Good we are using. 

10. Question: Since each layer In a Causal Order of Goods is composed of a Good, and since each Good is a composite of a Need, Useful Things, Knowledge and Control, can we possibly say that there are four sub-orders; a Causal Order of Needs, a Causal Order of Useful Things, a Causal Order of Knowledge, a Causal Order of Control, and each of these are at service of one human need? Is such a proposal useful? For instance, the need of bread implies the need of flour implies the need of wheat implies the need of fertile land etc etc.  

Explanations:

E.1. Since the provisions of nature cannot directly be consumed, most frequently, they are transformed into goods which can be consumed directly for gratification of our needs. And this chain of order in which provisions of nature, such as fertile land and wheat seed etc, are transformed successively into a final Good, say bread, is what we call Causal Order of Goods, with lowest, first, order being a consumption Good. 

It is called Causal Order because all goods are ordered with respect to their causal relation with human need, starting from goods which causing gratification of human need to goods which cause these goods to come into existence and so on. 

E.2. Consider the following instance:

Bread is first order good as it causes gratification of hunger, and bread requires flour, water, heat, and labour which are second order goods. From examples in Need and Useful Things we know that in one sense flour causes bread i.e. in its absence order of bread is disturbed. The same holds for water, labour and heat etc. Moreover, each of these has other requirements. Such as flour requires wheat grains, mill, labour, electricity etc. These are ranked higher in the causal order of goods. Ultimately, the wheat grains come from wheat farms, farmers, tractors, irrigation systems, fertilizers etc. These bear the last rank in the Causal Order of Goods. 

E.3. For simplicity, we can say Input Output requirements from raw material to final goods can be viewed as Causal Order of Goods connecting various goods (See Goods) in order of their requirements such that the first order is required for gratification of human needs. The following Schema (E.4) is useful for our purpose, and for other concepts we will discuss. 

E.4. Schema of The Causal Order of Goods:

I. First Order of Goods: Requirements necessary for gratification of human need. By their consumption, they cause the transition from disturbance, need, to order, satiation, in humans.

II. Second Order of Goods: Requirements necessary for development of First Order of Goods. By their combinations, they cause the First Order of Goods to exist.

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N-1: N-1st Order of Goods: Requirements necessary for development of N-2nd Order of Goods. By their combinations, they cause the N-2nd Order of Goods to exist.

N: Nth Order of Goods: Requirements necessary for development of N-1st Order of Goods. By their combinations, they cause the N-1st Order of Goods to exist.

E.5. In jargon we introduced in Need (See Need), a disturbance in a human organism requires goods with certain qualities and quantities which can cause the transition from disturbance, need, to order, satiation. An absence of these goods demand their production, which in turn requires other goods with certain qualities and quantities which can cause the transition from disturbance, absence of these goods (zero supply), to order, production of these goods (positive supply). And these other goods follow the same logic, and after several iterations we reach the highest order i.e. provisions of nature which have Good Characters and these in turn cannot be produced by any measure - their supply is fixed (while technical changes may help irrigate deserts but cannot expand endowments of earth).


Reference: Menger, Carl (2004). Principles of Economics, Online edition, The Mises Institute, 2004. (Chapter 01 page 55-58)

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