Nationalisation (an alternative spelling is nationalization) is the process of transforming private assets into public assets by bringing them under the public ownership of a national government or state. Nationalisation usually refers to private assets or assets owned by lower levels of government, such as municipalities, being transferred to the state. The opposites of nationalisation are privatisation, municipalisation and mutualization. Industries that are usually subject to nationalisation include transport, communications, energy, banking and natural resources.

Nationalisation may occur with or without compensation to the former owners. Nationalisation is distinguished from property redistribution in that the government retains control of nationalised property. Some nationalisations take place when a government seizes property acquired illegally. For example, in 1945 the French government seized the car-makers Renault because its owners had collaborated with the Nazi occupiers of France.

Nationalisation is to be distinguished from "socialization", which refers to the process of restructuring the economic framework, organizational structure, and institutions of an economy on a socialist basis. By contrast, nationalisation does not necessarily imply social ownership and the restructuring of the economic system, and by itself nationalisation has nothing to do with socialism, having historically been carried out for various purposes under a wide variety of different political systems and economic systems.


    Nationalised industries, charged with operating in the public interest, may be under strong political and social pressures to give much more attention to externalities. They may be obliged to operate loss-making activities where it is judged that social benefits are greater than social costs — for example, rural postal and transport services. The government has recognised these social obligations and, in some cases, provides subsidies for such non-commercial operations.

    Since nationalised industries are state owned, the government is responsible for meeting any debts. The nationalised industries do not normally borrow from the domestic market other than for short-term borrowing. If they are profitable, the profit is often used to finance other state services, such as social programs and government research, which can help lower the tax burden.


    The traditional Western stance on compensation was expressed by United States Secretary of State Cordell Hull during the 1938 Mexican nationalization of the petroleum industry that compensation should be "prompt, effective and adequate." According to this view, the nationalising state is obligated under international law to pay the deprived party the full value of the property taken.

    The opposing position has been taken mainly by developing countries, claiming that the question of compensation should be left entirely up to the sovereign state, in line with the Calvo Doctrine.

    Socialist states have held that no compensation is due, based on the view that private ownership over socialized assets is illegitimate, exploitative, or a hindrance to further economic development.

    In 1962, the United Nations General Assembly adopted Resolution 1803, "Permanent Sovereignty over National Resources", which states that in the event of nationalisation, the owner "shall be paid appropriate compensation in accordance with international law." In doing so, the UN rejected the traditional Calvo-doctrinist view and the Communist view. The term "appropriate compensation" represents a compromise between the traditional views, taking into account the need of developing countries to pursue reform even without the ability to pay full compensation, and the Western concern for protection of private property.

    In the United States, the Fifth Amendment requires just compensation if private property is taken for public use.

    Political support

    Nationalisation was one of the major mechanisms advocated by reformist socialists and social democrats for gradually transitioning to socialism. In this context, the goals of nationalisation were to dispossess large capitalists, redirect the profits of industry to the public purse and establish some form of workers' self-management as a precursor to the establishment of a socialist economic system.

    In the United Kingdom after the Second World War, nationalisation gained support by the Labour party and some social democratic parties throughout Europe. Although sometimes undertaken as part of a strategy to build socialism, more commonly nationalisation was also undertaken and used to protect and develop industries perceived as being vital to the nation's competitiveness (such as aerospace and shipbuilding), or to protect jobs in certain industries.

    A re-nationalisation occurs when state-owned assets are privatised and later nationalised again, often when a different political party or faction is in power. A re-nationalisation process may also be called "reverse privatisation". Nationalization has been used to refer to either direct state-ownership and management of an enterprise or to a government acquiring a large controlling share of a publicly listed corporation.[]

    See also



    On banks nationalization

    • , Stopping a Financial Crisis, the Swedish Way, The New York Times," September 23, 2008.
    • Hilferding, Rudolf (1981) Finance Capital: A Study of the Latest Phase of Capitalist Development (London: Routledge & Kegan Paul), p. 234. ISBN 0-7100-0618-7, ISBN 978-0-7100-0618-9
    • La Porta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer, Government Ownership of Banks, The Journal of Finance, vol. 57, No. 1 (February 2002), 265-301.
    • Vladimir Lenin (1917) Nationalisation of the Banks, published in October 1917 in pamphlet form
    • , From Japan's Slump in 1990s, Lessons for U.S., The New York Times, February 9, 2008.
    • , The International Political Economy of Bank Nationalization: Mexico in Comparative Perspective, Latin American Research Review, Vol. 27, No. 1 (1992), pp. 75–103.
    • , The Nationalization of Banks in France, Political Science Quarterly, Vol. 64, No. 2 (June 1949), pp. 189–210.
    • Political / Nationalization risk resources directory []

    External links