Nationalization is the act of taking assets into state ownership. Usually it refers to private assets being nationalised, but sometimes it may be assets owned by other levels of government, such as municipalities. Similarly, the opposite of nationalization is usually privatization, but sometimes it may be municipalization. Nationalization that happens after a previous privatization is often called renationalization.
A key issue in nationalization is whether the private owner is properly compensated for the value of the institution. The most controversial nationalizations are those where no compensation is paid or an amount unreasonably below the likely market rate (expropriation). Many nationalizations through expropriation have come after revolutions, especially communist ones.
The cost of legally buying a large business is such that many legal nationalizations have happened when firms of national importance run into trouble (close to bankruptcy), and could be acquired by the government for little or no money. A classic example is the UK nationalization in the 1970s of the car-maker British Leyland. At other times governments have felt it important to gain control of institutions and industries of strategic economic importance, such as banks or railways, or of important industries struggling economically. This policy was sometimes known as ensuring government control of the "commanding heights" of the economy, to enable it to manage the economy better in terms of long-term development and medium-term stability. The extent of this policy declined in the 1980s and 1990s as governments increasingly privatised industries that had been nationalised, replacing their strategic economic influence with use of the tax system and of interest rates.
Notable nationalizations
Britain - British Coal, British Gas, British Petroleum, British Rail, British Steel, British Leyland, British Airways and the telephones division of the Post Office (now British Telecom). 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, British Rail (broken up into multiple parts including train operators, train owners, and a track owner; the latter now effectively renationalised as Network Rail after near-bankruptcy) fared poorly after privatisation.
1918. Many retailing enterprises in the Soviet Union.
1944. 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.
Privatization (sometimes privatisation, denationalization, or disinvestment) is the process of transferring property from public ownership to private ownership and/or transferring the management of a service or activity from the government to the private sector.
Privatizing a non-profitable (or severe loss-making) company which was state-owned would shift the burden of financing off taxpayers, as well as freeing some national budget resources which may be subsequently used for something else.
Opponents of privatization dispute the claims concerning the alleged lack of incentive for governments to ensure that the enterprises they own are well run, on the basis of the idea that governments are proxy owners answerable to the people.
Privatization is the process by which the production of goods or services is removed from the government sector of the economy.
The British privatization of nearly four dozen major businesses and several hundred small ones set an example not only of the techniques that could be used, but also of the success that could be anticipated.
Privatization contributed, in large measure, to the revival of confidence in capitalism and the market economy, evidenced by the large number of countries which turned in that direction, and to its eventual triumph over the rival system of central planning, controls, and state ownership.
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