Administration

The article first describes characteristics of major infrastructure projects. Second, it documents a much neglected topic in economics: that ex ante estimates of costs and benefits are often very different from actual ex post costs and benefits. For large infrastructure projects the consequences are cost overruns, benefit shortfalls, and the systematic underestimation of risks. Third, implications for cost–benefit analysis are described, including that such analysis is not to be trusted for major infrastructure projects. Fourth, the article uncovers the causes of this state of affairs in terms of perverse incentives that encourage promoters to underestimate costs and overestimate benefits in the business cases for their projects. But the projects that are made to look best on paper are the projects that amass the highest cost overruns and benefit shortfalls in reality. The article depicts this situation as ‘survival of the unfittest’. Fifth, the article sets out to explain how the problem may be solved, with a view to arriving at more efficient and more democratic projects, and avoiding the scandals that often accompany major infrastructure investments. Finally, the article identifies current trends in major infrastructure development. It is argued that a rapid increase in stimulus spending, combined with more investments in emerging economies, combined with more spending on information technology is catapulting infrastructure investment from the frying pan into the fire.

Niccolò Machiavelli, the founder of modern political and administrative thought, made clear that an understanding of politics requires distinguishing between formal politics and what later, with Ludwig von Rochau, would become known as Realpolitik. No such distinction has been employed in the study of rationality. Yet I will argue that distinguishing between formal rationality and real rationality is as important for the understanding of rationality and planning as the distinction between formal politics and Realpolitik has been for understanding politics.

Au XVIIème siècle, lorsque la puissance de l'Europe est en crise et que l'Amérique gagne en autonomie, la ville de Madrid voit son monarque et ses ministres gouverner les territoires allant des Philippines aux Caraïbes, en passant par le Mexique et le Pérou. C'est notamment en partant du méconnu Juan Diez de la Calle, commis du secrétariat de la Nouvelle Espagne du Conseil des Indes de 1624 à 1662, que l'auteur contribue à expliquer le fonctionnement de cette mécanique impériale.