My essay is devoted to the subject of nationalization, its aims and methods and what advantages and disadvantages it has.

First of all it is necessary to define the definition of nationalization.
Nationalization is the act of taking an industry or assets into the public ownership of a national government or state. We can also say that it is the reverse process of privatization (transferring ownership of a business, enterprise, agency or public service from the public sector (government) to the private sector (business)) or deprevatisation.

There are lots of examples of this process in history which can show us the main motives for nationalization. First of all nationalization has often accompanied the implementation of communist or socialist theories of government, as was the case in the transfer of industrial, banking, and insurance enterprises to the state in Russia after 1918 and the nationalization of the coal, electricity, gas, and transport industries in the United Kingdom and France between 1945 and 1950. The second more recently motive: a further impetus has been resentment of foreign control over industries upon which the state may be largely dependent, as in the nationalization of the oil industries in Mexico in 1938 and Iran in 1951, and in the nationalization of foreign businesses in Cuba in 1960. A third motive for recent nationalizations may be the belief in some developing countries that state control of various industrial operations is at least temporarily necessary because of the lack of a developed capital market or supply of entrepreneurs in the domestic private sector.
The motives for nationalization are political as well as economic. It is a central theme of certain brands of 'state socialist' policy that the means of production, distribution and exchange, should be owned by the state on behalf of the people to allow for rational allocation and operation, and rational planning or control of the economy. Many socialists believe that public ownership enables people to exercise full democratic control over the means whereby they earn their living and provides an effective means of redistributing wealth and income more equitably.

Forms, methods, ways and rates of nationalization diversify from country to country and depend on concrete historical conditions. There are two main methods of nationalization. The first one is when payment of compensation is paid to the former owner and the second one provides non-repayable confiscation. V.I. Lenin supported the first method. His opinion was that transformation of bourgeois private property into social public property can be done by peaceful means without deprivation of the bourgeoisie of all property rights. He pointed that during the revolution the resistance of capitalists can be broken down, nationalizing the property of a few hundreds or at most one-two thousands millionaires. “It is not even necessary to take all the property rights from this “handful” of the rich. The property on many articles of consumption and on modest revenue can be left as well.” (Complete works, 5th edition, volume 32, p. 122) Marxism-Leninism differentiates large and small private properties. If large property is liable to nationalization, the small one is not. Marx and Engels believed that the private property mustn’t be destroyed at once, that expropriation of expropriators is not a one-time act. They also mentioned that payment of compensation is not only possible but reasonable.

There is no general meaning if nationalization is a good or a bad process. It has its advantages and disadvantages.  Speaking about advantages of nationalization of banks a few main points can me marked out. For government it is the possibility of mobilizing the capital for solving its problems and for banks it is protection from becoming a bankrupt. There are some more benefits to nationalization, and one of them is that it allows us to avoid the problem of valuing and buying up toxic assets from troubled banks. Besides it could help to restructure assets and liabilities and determine “reliable” and “unreliable” banks. Since the government has an interest in protecting its own liabilities, rather than maximizing shareholder value, the chances of “crazy gambles” will be minimized. One more advantage of nationalization is that it can warn against negative social consequences which can appear if a big company is going to become a bankrupt (e.g. employment layoffs). The government can nationalize it and take under its control. What concerns disadvantages, for government it is an increase of items of expense of budget. Moreover the government is less interested in getting revenue than individuals do. The quality of a product usually decreases because there is no need for improving it. There are also factories which are very successful and belong to state property for example an automobile concern Peugeout but it’s rather exception.  When the economy is stable the rule of free competition gets broken because the power of the government and individuals is not comparable and the management of the government is not effective.   

In Russia there is a law concerning nationalization. In some cases the government can appropriate private property. The main distinction from the revolution period is that the government should compensate the cost of nationalized property. Only two cases of nationalization are provided – provision with defence and national safety of the country. The government annually identifies the need of the country for strategic production. If such a situation happens that it will be impossible to acquire the commodities on the market or to make an order on state factories the government have the right to make a decision to nationalize capacities or the whole enterprise where these commodities can be produced.

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From my point of view nationalization can take place only in an emergency. During the world economic crises (2008-2009) lots of countries used it as a “medicine” against crises because private property was too weak to overcome it without interference of the government. And when a big factory in a small town is on the brink of becoming bankrupt there is a danger of social explosion and thousands people can become unemployed, when invisible hand of the market is not able to control the situation any more, when any important branch (e.g. row materials) of production is monopolized and conditions of free competition is destroyed nationalization will be necessary help for the state economy. But in my opinion it can exist only as a coercive measure. I believe that market economy should be based on private not state property. The nationalization in stable economics has already shown us its negative effects when in the USSR it finally led to the shortage of many goods.

I read many articles of people who are against nationalization and who support it and it helped me to make my own opinion that nationalization shouldn’t be an everyday process but sometimes it is really the way to regulate and normalize the economy.