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Nationalization, or nationalisation, is the process of transforming private assets into public assets by bringing them under the public ownership of a national government or state.Nationalization usually refers to private assets or assets owned by lower levels of government, such as municipalities, being transferred to the state. The opposites of nationalization are privatization and demutualization. When previously nationalized assets are privatized and subsequently returned to public ownership at a later stage, they are said to have undergone renationalization. Industries that are often subject to nationalization include telecommunications, electric power, fossil fuels, railways, airlines, iron ore, media, postal services, banks, and water.
Nationalization may occur with or without compensation to the former owners. Nationalization is distinguished from property redistribution in that the government retains control of nationalized property. Some nationalizations 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.
Nationalization 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, nationalization does not necessarily imply social ownership and the restructuring of the economic system. By itself, nationalization has nothing to do with socialism, having been historically carried out for various different purposes under a wide variety of different political systems and economic systems.However, nationalization is in most cases opposed by economic liberals as it can be perceived as excessive government interference in—and control of—economic affairs of individual citizens.
Since nationalized industries are state owned, the government is responsible for meeting any debts. The nationalized 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 Mexican nationalization of the petroleum industry in 1938, saying that compensation should be "prompt, effective and adequate". According to this view, the nationalizing 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 nationalization, the owner "shall be paid appropriate compensation in accordance with international law". In doing so, the UN rejected the traditional Calvo-doctrinal 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 the protection of private property.
In the United States, the Fifth Amendment requires just compensation if private property is taken for public use.
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Nationalization was one of the major mechanisms advocated by reformist socialists and social democrats for gradually transitioning to socialism. In this context, the goals of nationalization 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, nationalization gained support by the Labour party and some social democratic parties throughout Western Europe. Although sometimes undertaken as part of a strategy to build socialism, more commonly nationalization 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-nationalization occurs when state-owned assets are privatized and later nationalized again, often when a different political party or faction is in power. A re-nationalization process may also be called "reverse privatization". 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.[ citation needed ]
According to research by Paasha Mahdavi, leaders who consider nationalization face a dilemma: "nationalize and reap immediate gains while risking future prosperity, or maintain private operations, thereby passing on revenue windfalls but securing long-term fiscal streams."He argues that leaders "nationalize extractive resources to extend the duration of their power" by using "this increased capital to secure political support."
Nationalization can have positive and negative effects.A 2018 Stanford study of Chinese firms found their State-owned enterprises (SOEs) to be significantly more productive. In 2019 research based on studies from Greenwich University found that the nationalization of key services such as water, bus, railways and broadband could save £13bn every year.
Conversely, an assessment from the Institute for Fiscal Studies found that it would add at least £150bn to the national debt and make it harder for the country to hit its climate change targets. This analysis was based on the assumption that the Government would have to pay the market rate for these industries.
Expropriation is the seizure of private property by a public agency for a purpose deemed to be in the public interest. It may also be used as a penalty for criminal proceedings.Unlike eminent domain, expropriation may also refer to the taking of private property by a private entity authorized by a government to take property in certain situations.
Due to political risks that are involved when countries engage in international business it is important to understand the expropriation risks and laws within each of the countries that business is conducted in order to understand the risks as an investor in that country.
The term appears as "expropriation of expropriators (ruling classes)" in Marxist theory, and also as the slogan "Loot the looters!" ("грабь награбленное"), which was very popular during the Russian October Revolution.The term is also used to describe nationalization campaigns by communist states, such as dekulakization and collectivization in the USSR.
The term expropriation is found by late Marx writings, specifically in “Karl Marx: A letter to Otechestvenye Zapiski” to describe the process of turning agrarian/rural peasants into wage laborers/proletarians if the Russian country is to become a capitalist nation like that of the Western European nations.
Nikolai Bukharin had criticised the term 'nationalisation', preferring the term 'statisation' instead.
Another example is the expropriation of Granahorrar Bank owned by Julio Carrizosa Mutis in Colombia in 1998 as part of the economic plan performed by the Colombian government to mitigate the financial crisis. In the late 90s, the Central Bank tried to reduce liquidity caused by the financial crisis and Granahorrar, which was at the time one of the highest rated financial institutions, suffered liquidity distress caused from the government's decisions.As a result, the bank was expropriated without compensation and sold, on October 31, 2005, to the Spanish Bank BBVA.
In Venezuela, the massive expropriation plan that started in 2007, allowed to expropriate thousands of companies (from all strategic sectors) and land (arguing that those that were unproductive should be used to promote "food security and sovereignty").Expropriation and nationalization was one of the characteristics of the government of Venezuelan ex-President Hugo Chávez and President Nicolás Maduro. The result has been negative consequences in the economic sector.
In 1972, the Chilean government acquired control of the major foreign-owned section of the Chilean copper mining industry. The process, commonly described as the Chilenización del cobre,started under the government of Carlos Ibáñez del Campo and culminated during the government of President Salvador Allende, who completed the nationalization.
Granahorrar Bank was a bank based in Colombia (1972–1998). When it was open, it was part of a business conglomerate called Grupo Grancolombiano. The conglomerate also owned Banco de Colombia (Bancolombia), Colombia's largest bank. In 1982, the conglomerate underwent a period of crisis. Consequently, the Colombian government nationalized Granahorrar Bank and effectively took over the bank by force from its private owners.
The railways were nationalized after World War I. The German railway company Deutsche Bahn is owned by the Federal Republic. In 2008, it was agreed to "float" a portion of the business, meaning an end to the 100% share the German Federal Republic had in it, with a plan that 25% of the overall share would be sold to the private sector.However, the onset of the financial crisis of 2007–08 saw this cancelled. In addition, prior WW2 Nazi Germany's government had nationalized jewish-owned property, including shops, cars, etc. Throughout the Holocaust, most jewish-owned properties in Nazi Gerrmany and Nazi-occupied countries were nationalized, excluding minor amounts of cash and physical small objects, such as watches and diaries.
One example of expropriation occurred between the United States and Mexico in 1938 when the Mexican president Lázaro Cárdenas signed an order that expropriated almost all of the foreign oil companies operating in Mexico. This initially turned out to have great negative consequences on the Mexican economy when their oil exports were boycotted by major oil companies, decreasing exports dramatically,but later on, the economic benefits of this move became apparent, with the new national oil company PEMEX being an important contributor to the Mexican Miracle, and other countries soon followed with oil nationalization carried out in much of Latin America and the developing world.
In 1982, President José López Portillo started the nationalization of the Mexican banking system in response to the debt crisis. Under the Carlos Salinas de Gortari presidency (1988–1994), the nationalized banks were privatized very rapidly between 1991 and 1992 to Mexican family groups.
Since 2007, the government of Hugo Chávez started the nationalization of different companies. It started on May 1, 2007 with the world's biggest oil companies. On April 3, 2008, Chávez ordered the nationalization of cement industry and the nationalization of Venezuelan steel mill, among other industries such as cement and rice processing and packaging plants, on April 9.
A mixed economy is variously defined as an economic system blending elements of market economies with elements of planned economies, free markets with state interventionism, or private enterprise with public enterprise. As such, there is no single definition of a mixed economy. One definition is about a mixture of markets with state interventionism, referring specifically to capitalist market economies with strong regulatory oversight and extensive interventions into markets. The other definition is apolitical in nature, strictly referring to an economy containing a mixture of private enterprise with public enterprise.
Eminent domain, land acquisition, compulsory purchase, resumption, resumption/compulsory acquisition (Australia), or expropriation is the power of a state, provincial, or national government to take private property for public use. It does not include the power to take and transfer ownership of private property from one property owner to another private property owner without a valid public purpose. However, this power can be legislatively delegated by the state to municipalities, government subdivisions, or even to private persons or corporations, when they are authorized by the legislature to exercise the functions of public character.
State ownership, also called government ownership and public ownership, is the ownership of an industry, asset, or enterprise by the state or a public body representing a community as opposed to an individual or private party. Public ownership specifically refers to industries selling goods and services to consumers and differs from public goods and government services financed out of a government's general budget. Public ownership can take place at the national, regional, local, or municipal levels of government; or can refer to non-governmental public ownership vested in autonomous public enterprises. Public ownership is one of the three major forms of property ownership, differentiated from private, collective/cooperative, and common ownership.
The socialist market economy (SME) is the economic system and model of economic development employed in the People's Republic of China. The system is based on the predominance of public ownership and state-owned enterprises within a market economy. The term "socialist market economy" was introduced by Jiang Zemin during the 14th National Congress of the Communist Party of China in 1992 to describe the goal of China's economic reforms. Originating in the Chinese economic reforms initiated in 1978 that integrated China into the global market economy, the socialist market economy represents a preliminary or "primary stage" of developing socialism. Despite this, many Western commentators have described the system as a form of state capitalism.
Reprivatization refers to the process of restoring to its former owners properties seized by a government, or to the process of compensating previously uncompensated former owners. This is often a component of larger privatization schemes. The term is most often used in the connection with privatization in former Soviet Bloc countries or in reference to settlements concerning the property of murdered or displaced European Jews. The difference between reprivatization and privatization is that only state (nationwide) property can become the subject of the transaction, but not municipal property. The economic content of these concepts also has differences: the privatized property is obtained due to the costs of the state, but the reprivatized property previously belonged to individuals who received income from its exploitation, they also created it.
Chavism or Chavezism is a left-wing political ideology based on the ideas, programs and government style associated with the former Venezuelan President Hugo Chávez that combines elements of democratic socialism, left-wing populism, patriotism, internationalism, Bolivarianism, feminism, and Caribbean and Latin American integration. Supporters of Chávez and Chavismo are known as Chavistas.
The nationalization of oil supplies refers to the process of confiscation of oil production operations and private property, generally in the purpose of obtaining more revenue from oil for oil-producing countries' governments. This process, which should not be confused with restrictions on crude oil exports, represents a significant turning point in the development of oil policy. Nationalization eliminates private business operations—in which private international companies control oil resources within oil-producing countries—and allows oil-producing countries to gain control of private property. Once these countries become the sole owners of these confiscated resources, they have to decide how to maximize the net present value of their known stock of oil in the ground. Several key implications can be observed as a result of oil nationalization. "On the home front, national oil companies are often torn between national expectations that they should 'carry the flag' and their own ambitions for commercial success, which might mean a degree of emancipation from the confines of a national agenda."
Between 1950 and 1960, the imperial government of Ethiopia enacted legislation and implemented a new policy to encourage foreign investment in the Ethiopian economy. This new policy provided investor benefits in the form of tax exemptions, remittances of foreign exchange, import and export duty relief, tax exemptions on dividends, and the provision of financing through the Ethiopian Investment Corporation and the Development Bank of Ethiopia. In addition, the government guaranteed protection to industrial enterprises by instituting high tariffs and by banning the importation of commodities that might adversely affect production of domestic goods. Protected items included sugar, textiles, furniture, and metal. The government also participated through direct investment in enterprises that had high capital costs, such as oil refineries and the paper and pulp, glass and bottle, tire, and cement industries. In 1963, with the Second Five-Year Plan under way, the government enacted Proclamation No. 51. The proclamation's objective was to consolidate other investment policies enacted up to that period, to extend benefits to Ethiopian investors, and to create an Investment Committee that would oversee investment programs. In 1966 the Ethiopian government enacted Proclamation No. 242, which elevated the Investment Committee's status as an advisory council to that of an authorized body empowered to make independent investment decisions. Thus, by the early 1970s, Ethiopia's industrialization policy included a range of fiscal incentives, direct government investment, and equity participation in private enterprises.
From his election in 1998 until his death in March 2013, the administration of the late Venezuelan President Hugo Chávez proposed and enacted populist economic policies as part of his Bolivarian Revolution. Hugo Chávez destroy Venezuela
Agriculture in Venezuela has a much smaller share of the economy than in any other Latin American country. After the discovery of oil in Venezuela in the early 20th century to the 1940s, agriculture has declined rapidly, and with the beginning of large-scale industrial development in the 1940s, agriculture and land reform was largely neglected by successive governments. Since 1999, under the Bolivarian Revolution of President Hugo Chávez, agriculture has had a somewhat higher priority. Agriculture in Venezuela accounts for approximately 3% of GDP, 10% of the labor force, and at least a quarter of Venezuela's land area.
The social dividend is the return on the capital assets and natural resources owned by society in a socialist economy. The concept notably appears as a key characteristic of market socialism, where it takes the form of a dividend payment to each citizen derived from the property income generated by publicly owned enterprises, representing the individual’s share of the capital and natural resources owned by society.
The Arab Socialist Union was an Egyptian political party based on the principles of Nasserist Arab socialism.
The Nationalisation process in Pakistan was a policy measure programme in the economic history of Pakistan, first introduced, promulgated and implemented by Prime Minister Zulfikar Ali Bhutto and the Pakistan Peoples Party to lay the foundation of socialist economics reforms to improve the growth of national economy of Pakistan. Since the 1950s, the country had undergone a speedy industrialisation and became an industrial paradise in Asia. But, as time progressed, the labour trade unions and labour-working class had increasingly strained relations with the industrial business oligarch class, having neglected to improve working conditions and failing to provide a healthy and safe environment for the workers in these industrial industries.
State socialism is a political and economic ideology within the socialist movement advocating state ownership of the means of production, either as a temporary measure or as a characteristic of socialism in the transition from the capitalist to the socialist mode of production or communist society.
Socialist economics comprises the economic theories, practices and norms of hypothetical and existing socialist economic systems. A socialist economic system is characterized by social ownership and operation of the means of production that may take the form of autonomous cooperatives or direct public ownership wherein production is carried out directly for use rather than for profit. Socialist systems that utilize markets for allocating capital goods and factors of production among economic units are designated market socialism. When planning is utilized, the economic system is designated as a socialist planned economy. Non-market forms of socialism usually include a system of accounting based on calculation-in-kind to value resources and goods.
Socialism is one of the four fundamental principles according to the original Constitution of Bangladesh. Socialism in Bangladesh differs from socialist countries where all the means of production are owned socially. Socialism has been considered in the Constitution as a way to establish an exploitation-free society. The constitution allows cooperative and private ownership along with state ownership.
Granahorrar Bank was a bank based in Colombia that was open from 1972 to 1998. When it was open, it was part of a business conglomerate called Grupo Grancolombiano. The conglomerate also owned Banco de Colombia (Bancolombia), which is Colombia's largest bank.
Julio Carrizosa Mutis was a Colombian businessman active in the construction and financial sectors in Colombia.
The Peruvian Military Junta of 1968–1980 or Revolutionary Government of the Armed Forces was a far-left wing Military junta in Peru. The Revolutionary Government of the Armed Forces was led by Juan Velasco Alvarado.
At the heart of its vision has been social or common ownership of the means of production. Common ownership and democratic control of these was far more central to the thought of the early socialists than state control or nationalization, which developed later. [...] Nationalization in itself has nothing particularly to do with socialism and has existed under non-socialist and anti-socialist regimes. Kautsky in 1891 pointed out that a 'co-operative commonwealth' could not be the result of the 'general nationalization of all industries' unless there was a change in 'the character of the state'.
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