1 The theory of dynamic efficiency

38 The ongoing Methodenstreit of the Austrian School
since the actor involved in them must have realized previously that this course
of action, which is so automatic, mechanical and reactive, is the most advisable
in the specific circumstances in which s/he has found him/herself. In
other words, the neoclassical approach is merely a specific case, of relatively
minor importance, which is included and subsumed under the Austrian conception,
which is much more general, richer and more explicative of the real world.
Furthermore, for the Austrians, there is no sense in separating microeconomics
and macroeconomics into two watertight compartments as the
neoclassical economists do. On the contrary, economic problems should be
studied together on an interrelated basis, without distinguishing between
their micro and macro components. The radical separation between the
‘micro’ and ‘macro’ aspects of economic science is one of the most characteristic
insufficiencies of modern introductory manuals and textbooks on
political economy. Instead of providing a unified treatment of economic
problems, as Mises and the Austrian economists try to do, they always present
economic science as divided into two different disciplines (‘microeconomics’
and ‘macroeconomics’) with no connection between them and
which, therefore, can be studied separately. As Mises rightly says, this
separation originates from the use of concepts which, like the general price
level, ignore the application of the subjective and marginalist theory of value
to money and continue anchored in the pre-scientific stage of economics,
when it was still attempted to make analyses in terms of global classes or
aggregates of goods, rather than in terms of incremental or marginal units of
them. This explains the fact that, to date, a whole ‘discipline’ based on the
study of the mechanical relationships which supposedly exist between macroeconomic
aggregates has been developed, the connection of which with
individual human action is difficult, if not impossible, to understand. 17
In any case, the neoclassical economists have converted the model of equilibrium
into the focal point of their research. In this model, they assume that
all information is ‘given’ (either in certain or probabilistic terms) and that the
different variables are perfectly adjusted. From the Austrian point of view,
the main disadvantage of this methodology is that, as it assumes that all the
variables and parameters are perfectly adjusted, it is easy to draw erroneous
conclusions on the cause and effect relationships between different economic
concepts and phenomena. Thus, the equilibrium would act as a sort of veil that
would prevent the theorist from discovering the true direction that exists in the
cause and effect relationships of economic laws. For the neoclassical economists,
rather than laws of tendency that go in a single direction, what exists is a mutual
(circular) determination between the different phenomena, the initial origin
of which (human action) remains concealed or is considered of no interest. 18
Subjective costs (Austrians) versus objective costs (neoclassicals)
Another essential element of Austrian methodology is its purely subjective
conception of costs. Many authors believe that it would not be very difficult