process of getting things we want for things we are willing to dispose of, we generally first exchange the latter for money and then exchange the money for the things we want. And, as the number of people who want things of all sorts must manifestly be greater than the number of people who want the particular thing, whatever it may be that we have to exchange, any difficulty there may be in making our exchange will generally attend the first part of it; for, in exchanging anything for money, I must find some one who wants my particular thing, while in exchanging money for a commodity, any one who wants any commodity or service will be willing to take my money. Now, this habit of estimating wealth in money, and of speaking of gain or loss of wealth as gain or loss of money, and this habit of associating difficulties of exchange in individual cases with the difficulty of obtaining money, constantly lead people who do not think clearly to jump at the conclusion that money is more valuable than anything else. Yet the slightest consideration would show them that wealth never consists, but in very small part, of money; that the difficulty in individual exchanges has no reference to the relative value of money, and is eliminated when the exchanges of large numbers of individuals are concentrated or considered, and, in short, a dollar in money is worth no more than a dollar's worth of wheat or cloth; and that, instead of the exchange of money for other commodities being proof of a disadvantageous bargain, it is proof of an advantageous bargain, for, if we did not want the goods more than the money, we would not make the exchange.
Or, to take another example: In connection with the discussion of Chinese immigration, you have, doubtless, over and over again heard it contended that cheap labor, which would reduce the cost of production, is precisely equivalent to labor-saving machinery, and, as machinery operates to increase wealth, so would cheap labor. This conclusion is jumped at from the fact that cheap labor and labor-saving machinery similarly reduce the cost of production to the manufacturer. But, if, instead of jumping at this conclusion, we analyze the manner in which the reduction of cost is produced in each case, we shall see the fallacy. Labor-saving machinery reduces cost by increasing the productive power of labor; a reduction of wages reduces cost by reducing the share of the product which falls to the laborer. To the employer the effect may be the same; but, to the community, which includes both employers and employed, the effect is very different. In the one case there is increase in the general wealth; in the other there is merely a change in distribution—whatever one class gains another class necessarily losing. Hence the effect of cheap labor is necessarily very different from that of improved machinery.
And precisely similar to this fallacy is that which seems so natural to men of another class—that because the introduction of cheaper
