The Quiet Renationalization of Industry

Nationalization is politically impossible in most Western economies and functionally underway in several. The mechanism is not expropriation, it is accumulation: an equity stake attached to a rescue, a golden share retained after a privatization, a security agreement that gives a ministry a veto over the board.

Each instrument is defensible on its own facts. Taken together they produce firms that operate commercially, report to private shareholders, and cannot make a significant decision without a government official's agreement.

This hybrid has real advantages. It preserves managerial discipline while giving the state a lever it can pull in an emergency, which is more than it had during the last several.

It also has an accountability gap that nobody has closed. When a firm is fully public, a legislature can examine it. When it is fully private, a market can price it. A firm in between is examined by neither, and the officials exercising the veto are rarely required to explain why.

The word nationalisation is doing the work of concealment here, and it is doing it by being absent. Nobody has to defend a policy that nobody has named.

The instruments are individually familiar. A grant with conditions attached. A loan with a warrant. A security review that produces an undertaking. A subsidy that requires a say over siting. Each has a long history and a respectable justification.

What is new is density. A firm can now be subject to several of these at once, from different agencies, on different timetables, with no single official holding a view of the total.

The money side is unusually well documented, which makes the opacity elsewhere more striking. Award data records what was granted to whom, and the published statements record the aggregate position.

What no published source records is the condition attached. A grant appears as a number, and the undertaking that came with it, which may govern where a plant is built or who may buy the firm, is not in any register a citizen can search.

The security review layer works the same way by design. The review rules govern foreign investment and produce mitigation agreements that are, appropriately, not public, because they concern specific vulnerabilities.

That confidentiality is defensible case by case and produces an aggregate nobody can see. The state holds a growing set of contractual rights over private firms, and there is no document that says how many or of what kind.

The accountability gap follows directly. A fully public firm answers to a legislature that can compel its officers. A fully private firm answers to shareholders who can price its decisions. A hybrid answers to a department under a confidential agreement.

None of the three usual scrutiny mechanisms fits. There is no annual report to a parliament, no market signal that reflects the constraint, and no disclosure obligation that captures the undertaking.

It is worth conceding the case for the arrangement, because it is strong. The state acquired these levers after episodes where it had none, and an emergency in which a government can direct a supply chain is better than one in which it can only ask.

The objection is not to the lever. It is that a lever without a register is a power the public cannot count, and powers the public cannot count have a consistent tendency to be used for purposes the public was never asked about.

The fix is the least ambitious thing available. Publish the existence and general character of the conditions, not their content: which firms carry undertakings, to which department, and of what type. The borrowing that funds it is already reported to that standard.