Nationalizationde:Verstaatlichung
es:Estatalización
fr:Nationalisation
pl:Nacjonalizacja
ro:Naţionalizare
Nationalization (or Nationalisation) also known as public ownership or socialization (or Socialisation) is the act of taking private assets into government or state ownership. It is the opposite of privatization.
Arguments for nationalization
- In the case of an essential service - particularly one on which lives may depend - nationalisation theoretically ensures the continuation of this service regardless of commercial or environmental pressure. Although a governmental monopoly is nonetheless still a monopoly, it is theoretically answerable to the electorate rather than a small group of shareholders.
- Nationalisation and the threat of same reduces the ability of non-governmental organisations to challenge or influence a democratically-elected government's power.
- By creating a monopoly, albeit a publicly accountable monopoly, nationalisation eliminates wasteful competition and transaction costs.
- A profitable nationalised industry theoretically adds its wealth directly to that of the country, rather than to a subset of its population.
- Nationalised industries are guaranteed against bankruptcy and so can borrow money at lower interest rates to reflect the lower risk to the lender.
- Employees may be more inclined to view their work positively if it appears to be directed by and for the good of the people rather than the theoretically impersonal forces of corporate competition.
Arguments against nationalization
- Nationalisation may create a Government monopoly in a sector which might otherwise be innervated by competition.
- The perceived 'invulnerability' of a Government monopoly can stifle an industry's willingness and ability to compete. A government which is unable or unwilling to create a competitive nationalized industry becomes forced to expend ever-greater amounts of tax revenue in order to keep the industry from collapsing.
- The theoretical democratic accountability of a nationalised industry - in the case of nationalisation by a democratic government - may, in reality, have no more relation to the desires of the workforce and population than that of a commercial entity.
- Government inefficiency in running production, trading, or service operations may cause misallocations of labor and capital, with consequent reductions in the standard of living and economic growth.
- Groups may object violently to losing their private assets, particularly in cases where the financial compensation, if any, paid to the former owners of a nationalised industry is less than the actual or perceived 'going rate'.
- Lack of accountability to the market, i.e., consumer choices may be reduced and there may be no alternative sources - and no catalysts for alternative sources - of goods or services that better meet consumer preferences.
- Nationalised industries may be prone to interference from politicians for political or populist reasons. The industry may be over-staffed in order to reduce unemployment; it may be forced to conduct transactions or actions in certain areas in order to win local votes; it may be forced to manipulate its prices in order to control inflation, for example. At the extremes, a service on which lives may depend - food distribution, for example - may be perverted in order to ensure the exclusive survival of those groups of which the government approves.
Notable nationalizations
- Renault (seized from Louis Renault after WWII for his collaboration with Nazi Germany). Renault was successful whilst nationalised and remains successful today, after having been privatised in 1996.
- Britain - British Coal, British Gas, British Petroleum, British Rail, British Steel, British Leyland, British Airways and Britain's Post Office (from which British Telecom emerged). All the aforementioned were privatised during the Conservative period in power from 1979-1997. Many - particularly British Steel and British Leyland - fared poorly whilst nationalised. Conversely, both Britain's Post Office and British Rail (now Railtrack) fared poorly after privatisation.
- Nationalization of the oil industry in numerous countries, including Kuwait, Mexico, Saudi Arabia, and Venezuela.
- All manufacturing enterprises in the Soviet Union, in 1918.
- Many retailing enterprises in the Soviet Union, in 1918.
- Nationalisation of Banks in India in 1969.
- Companies in Cuba (the USA has long complained about these nationalizations).
- Nationalization of electricity during the Quiet Revolution of Quebec, by minister René Lévesque and the Lesage government, to create Hydro-Quebec.
- Zimbabwe's nationalisation of its food distribution infrastructure.
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