The fundamental difficulty in basing macroeconomic policy on microeconomic theory

Microeconomic theory is the theory of individual choice. For macroeconomic problems to be analyzed and solutions proposed with microeconomic theory, such problems must be capable of being defined in individualistic terms. It is argued that individuals can never perceive truly social problems requiring collective action in a manner consistent with the requirements of microeconomic theory. Even reformulating microeconomic theory to allow for interpersonal comparisons of utility, individuals may not be able to perceive the nature of social concerns in a manner necessary to support individually motivated actions bringing forth a solution.