In most good stories, one of the main characters has some kind of unresolved issue from the past that he would rather not deal with. The writer should use the story's plot to force the character to face his past. The story begin with a latent, buried conflict and progresses into a more active conflict. Every link in the story's cause and effect should contribute toward this end. Plot and character and theme are all interconnected.
Cause and effect are two obvious elements in a story's plot. Cause usually involves a character taking action, and effect is the practical and emotional consequence of that action. Less obvious is what the characters think is going to result from their actions. The gap between expected results and actual results is a central notion in Robert McKee's book "Story." That gap can reveal essential things about a character, and consequently alter her future actions. Paying attention to this gap allows the writer to build in complicated layers of cause and effect.
Every story is built on what screenwriters call story beats. These are the most notable instances of cause and effect that move the story's plot along. A man shoots another man and he dies, for instance. But within each scene are smaller beats, individual units of action and response. For example, a wife hints that her husband is cheating, and he responds by remarking on some small fault of hers. It is easy to fall into the trap of writing a scene that essentially repeats the same beat, over and over. The skillful writer will realize that each beat changes the dynamics of the scene, and will explore the new possibilities that are created. Scene beats are cause and effect at the subtlest level.
In the best scenes, there will be a beat that will move the action in an unexpected direction. The above scene, for example, seems to be heading toward a moment where the husband will be forced to admit his infidelity. It would be more unexpected and more interesting if, say, the husband's citing of her fault prompted the wife to make her own confession about infidelity or some other matter. Her hinting at the husband's wrongdoing, we would realize, was an expression of her own guilt. Every unit of cause and effect creates new movement and new possibility in the story.
While it is difficult to write a novel without obvious cause and effect, the short story is a flexible literary form that can sometimes escape the rules of traditional narrative. Most often this is accomplished through an impressionistic technique in which the writer depicts a series of moments, like snapshots in a picture book, but allows the reader to draw her own conclusions about cause and effect. This is the short story as collage, a sensibility one can see in the work of Amy Hempel and others. The popularity of flash fiction -- stories of under 1,000 words and sometimes much shorter -- has produced alternative narrative forms such as lists and letters that often avoid the clear cause and effect of more traditional storytelling. In all of these alternative approaches, cause and effect are created less on the page and more in the mind of the reader.