Lets look at this from a practical standpoint. I will ignore ballistics and physics and kinetic energy here.
When your fighting a bunch of people close up, you want to spray as many bullets into the crowd as you can to cut down as many enemies as possible in as short amount of time as possible, and a machine gun is ideal for that. The fact that there is less energy being applied to the target per round is offset by the fact that more rounds will land on target.
When you have time to take aim and choose your targets, it is because they are farther away and you have the time to do so, that is when you want one bullet to do as much work as possible. A machine gun, just because of recoil will not be accurate over a larger distance, whereas a rifle will be more accurate at a distance, and carry more kinetic energy when it gets there.
So, use both and switch out based on tactics needed to win the fight.
IRL, AFAIK, full auto weapons are generally used for suppressive fire. Under these conditions, more smaller bullets > fewer bigger bullets. Suppressive fire relies on a sense of self-preservation in the target to work. Since Vipers and Powder Ganger armed with knives will happily charge a power armored, minigun wielding maniac, suppressive fire it out.
Also, the flipside of not smaller bullets not transferring as much KE into their target and reducing their knockdown power is that smaller rounds with equal gunpowder have better penetration of light cover and body armor.