Economics explained
Category:
microeconomic policies
Nationalisation
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Nationalisation
Nationalisation is the process of raking assets into state ownership - it is when the government takes over private-sector corporations. A nationalised organisation is also known as a public-sector organisation.
Many countries in the world have nationalised their railways, airlines, mining, electricity and water industries as well as, more recently, banks and financial services.
There are some very relevant economic arguments to support nationalisation.
Strategic services
It makes sense for certain strategic services and activities to be in the hands of the public sector. This is particularly true of railways, bus services, airports and electrical and water supplies. There is also a long-standing socialist view that such services are for the benefit of the public and should therefore be in the public sector.
Duplicate services
There is little sense in duplicating certain services like railways and water supplies, largely because of the high costs of establishing that provision.
Profits reinvested
Any profits made will be returned to the business and reinvested for the benefit of the public.
Provide loss-making services
State-owned industries are more likely to respond to the public interest, ahead of the profit motive. For example, state-owned industries are more likely to cross-subsidise unprofitable operations from profitable ones.