Hülsmann on the distinction between microeconomics and macroeconomics

by Stephan Kinsella on October 21, 2026

From PFSer Martin Martín Cabrera¹, re Jörg Guido Hülsmann, “Garrisonian Macroeconomics,” Q. J. Austrian Econ. 4, no. 3 (Fall 2001): 33–41:

Great insight by Jörg Guido Hülsmann on the distinction between microeconomics and macroeconomics:

“Modern macroeconomics began with Böhm-Bawerk’s seminal Capital and Interest. The epithet “modern” is shorthand for “post-Ricardian” and refers most notably to the application of methodological individualism in explanations of phenomena such as the production structure, capital, and money interest. Böhm-Bawerk showed that and how these phenomena, which affect more or less all members of society (“the economy as a whole”), result from individual human action and interaction. Menger had pioneered this method. He had shown how prices on individual markets spring from the acting person’s evaluation of marginal quantities of economic goods. Böhm-Bawerk did nothing but extend the application of this method to explain how the various markets interrelate, what costs are, and how and why interest comes into existence. Later, Mises applied the very same method to explain the impact of money on the economy, and to analyze the business cycle. With Mises’s 1912 treatise on money, Austrian economics had come full circle, giving a coherent and encompassing explanation of all economic phenomena (see Mises 1980).

It is therefore of little surprise that the early Austrian economists did not distinguish between microeconomics and macroeconomics. There was in their eyes only one type of economic analysis, which was based on certain invariable facts of human action—such as “only individual persons act,” “acting involves choosing,” “choice refers to marginal units of economic goods”— and which was able to give a satisfactory explanation of all economic phenomena. From this point of view, one might call certain phenomena “macroeconomic” because they are virtually immune from the choices of any given person, but result from the combined effect of the choices of great masses of people; and one might call other phenomena “microeconomic” because here the impact of individuals is perceptible and important. But this distinction is entirely nominal—it is an artificial convention without foundation in real differences. The fact is that all economic phenomena result from individual choices; hence, Menger’s method can be applied universally; and ultimately there can be only one unified economic science, just as there is only one real world that this science describes.”

— MⒶrtin C. Gamazo 🟨⬛🇦🇹 (@MartinCGamazoR) October 20, 2026

First Guatemalans at the PFS. [↩]

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