Dangerous Obsession Germany's Export Fetish

Germans have built a national identity around the strength of their exports – and are jeopardizing economic growth worldwide by concentrating on selling goods abroad instead of buying more at home.
VW models awaiting export.

In the spring of 1990, the philosopher Jürgen Habermas wrote a now famous essay for the German weekly Die Zeit entitled “DM Nationalism.” Habermas worried about the possible emergence of a new kind of economic nationalism in Germany. Since other forms of national consciousness had weakened since the 1960s, Germans were left only with what he called the “confidence of an economically successful nation” as a substitute for missing national pride – with the Deutsche Mark as the symbol of that new confidence.

Shortly after he wrote the essay, German reunification was followed by the decision to replace the deutsche mark with the euro. Since the introduction of the common currency, the German economy has recovered – largely as a result of an increase in exports. According to the World Bank, exports as a share of GDP have grown from 29 percent in 1999 to 51 percent in 2013 – an extraordinarily high proportion for a country of Germany’s size.

In this context, it seems that exports have replaced the deutsche mark as a symbol of national pride for Germans. Germany is proud of being an “export nation” – a term that suggests that exports do not just contribute substantially to the German economy but are also central to national identity itself. However, this new sense of national identity has problematic consequences.

Germans were left only with what he called the “confidence of an economically successful nation” as a substitute for missing national pride.

Within the European single currency, Germany’s export dependence is a problem. Time and again, the German current account surplus – that is, the net profit of a country that exports more than it imports – has come under fire. At more than 7 percent of GDP, Germany's surplus is now bigger than China's. At the recent autumn meeting of the International Monetary Fund in Washington, Germany once again came under pressure to increase domestic demand in order to boost growth elsewhere in the euro zone.

However, in Germany, such demands are mostly perceived as bizarre and unjust criticism of the country’s “export strength.” People in Germany are proud of the current account surplus, which they see as a symbol of success that illustrates Germany’s “competitiveness.” Perhaps the best example of this is the term  “Exportweltmeister”, or “export world champion,” which suggests the global economy is a competition from which Germany has emerged as a winner.

Even if the German current account surplus is a problem for other E.U. member states, what can the government do about it? Ask German companies to produce lower-quality goods?

No one denies that it’s a good thing that Germany manufacturers excellent products. But what is missing in Germany is a debate about the significance and consequences of its export-dependent economy. After all, exports are just a means to create wealth. In Germany, however, export-oriented companies have regained competitiveness in the last decade mostly as a result of wage restraint. In other words, Germans haven’t even been rewarded for their success in selling abroad. So what's the point of exporting more and more?

Within the European single currency, Germany’s export dependence is a problem

The fixation with being an “export nation” not only has negative consequences for the global economy but also makes Germany itself vulnerable: it now faces a recession because external demand, which has been falling in the euro zone since the beginning of the crisis, is now weakening in Russia and China as well. But the German government sees no alternative.

There seems to be something irrational about Germany's attempt to export more and more, no matter how or at what cost. It is as if exporting were an end rather a means. In fact, one wonders whether exports have become “libidinally cathected”, as Habermas wondered about the Deutsche Mark in 1990. Deutsche Mark nationalism seems to have been replaced by export nationalism.

This export nationalism has made it particularly hard for Germany to find a solution to the euro crisis. German exporters have benefited from the euro because its weakness relative to the Deutsche Mark increased their competitiveness beyond Europe. To ensure the common currency’s survival, however, economic imbalances within the euro zone need to be corrected. That in turn means that Germany needs to become less competitive compared to the rest of the euro zone. But Germany cannot do this because it needs to remain competitive in relation to countries outside of Europe.

In order to solve this dilemma, Germany should strive for balanced growth – in particular by increasing domestic demand – rather than defending its "competitiveness". This would mean that exports would make up a somewhat smaller share of GDP. But Germans would both benefit more from their own economic strength and help other economies. In order to restructure the economy in this way, however, Germans will first need to overcome their export fetish.


This article first appeared in Die Zeit. Hans Kundnani is the research director at the European Council on Foreign Relations. He is the author of "The Paradox of German Power," which is published on November 27. To contact the author: [email protected].