When the Presans team members gave their ideas for topics for a special issue of the newsletter, the theme that intrigued me the most came from our Fellow Hervé Arribart. Hervé suggested that it would be interesting to talk about mental health. A surprising idea. Does this theme have anything to do with industrial innovation? Probably not. I had to think about it for a while to find an angle of approach. But the further I got, the more the theme of mental health became a thread to better explain what is going on in the key industrial sectors of energy and defense. In a nutshell, but I’ll come back to this, these sectors are currently under increased pressure to comply with new standards, which at some point have to be questioned to what extent they are or are not completely delusional. The cause of this harmful situation is a lack of cohesion at the systemic level.
We are facing a delirious but cohesive system
When you start to suggest that the system is delusional, it’s best to get specific. Let’s start with mental health. What is it? Mental health is a state of good psychological functioning. Psychological functioning is based on playing an active role in a positive and realistic narrative. The narrative is collective and tends to be associated with a morally charged symbol.
To avoid an overly technical discussion, let’s take a short detour into fiction. Fiction allows us to virtually explore various roles and narrative structures without going crazy, by playing on our Musilian sense of possibility. Thus in Houellebecq’s novels the protagonists are typically deficient in moral energy because the society they inhabit is disintegrating, in other words becoming less cohesive. Religion, grand narrative, symbols: everything is unstable. The Houellebecquian protagonists do not play an active role, their story is not positive, but the reader is invigorated by the author’s pessimism. This is to illustrate the notions of active role and positive narrative: the opposite of what the main protagonist experiences in a Houellebecq novel. But there is not only this author. Here is another illustration, for those who have never read a line of Houellebecq: the ancients found it invigorating to organize competitions to reward the one who would write the most horrible tragedy.
The important idea, then, is to remain tonic. Applied to reality, this principle tells us that a system is mentally healthy if it plays an active and positive role in reality. It also tells us that a system may prefer to play an active and positive imaginary role rather than a less active, less positive role in reality. Exactly like the raving lunatics.
Let’s transpose: a delusional system is an active and positive system, but only in imagination1. At least temporarily, its level of systemic cohesion may be higher than that of the realists. This is exactly what we observe in France in the case of the industrial sectors of defense and energy. These realists are currently, without knowing it, in a novel by Houellebecq.
Over-compliance is a symptom of the problem
Now let’s get into the characterization of the current situation in both sectors. Here is a new word: over-compliance. This is a very important term. It comes from the defense sector. Currently, French and European companies in this industrial sector are trying to alert the authorities and public opinion to the unprecedented pressure exerted on them by players in the financial sector. Banks, for example, are increasingly reluctant to finance companies with more than a certain percentage of their activity in the defense sector. Why? Because according to ESG (Environment, Social, Governance) standards, the defense sector would be too risky an investment. I already talked about ESG criteria last month in relation to the energy sector, but I have the impression that not everyone in the industry has yet taken the measure of the fact that it is exactly the same type of phenomenon that is now affecting in a direct and existential way:
- The oil industry, under pressure from ESG standards
- The nuclear sector, currently plunged into uncertainty due to the future European taxonomy of energies
- The defense sector, due to ESG standards among other things
The list is probably not exhaustive, but the role of ESG criteria is obvious. With these criteria, what initially corresponds to a political conviction concerning an externality of economic activity is transformed into an economic risk, then into a financial performance indicator, anticipating the complete internalization of the initial externality. This operation of systemic self-persuasion denotes a system in a state of delirium, to the extent that the consideration of externalities is not subordinated to a realistic systemic conception.
ESG criteria are the transposition of standards from the narrative that currently dominates our economic system. According to this narrative, compliance with ESG criteria indicates that an organization plays an active and positive role in the system. Non-compliance, on the other hand, indicates a poor risk/return ratio. Defense and energy companies are currently subject to this ESG narrative and struggle to offer a more powerful vision. Their response is limited to truncating this narrative by keeping only the potentially positive part for themselves if that is even possible. This is not enough to get out of the reactive posture. In the case of nuclear power, for example, it is not enough to retain decarbonization.
The problem is an insufficient level of systemic cohesion
Having described the current situation, we must ask ourselves why these sectors are in a weak position. To cut to the chase: because these sectors are increasingly losing the benefit of the cohesion that binds them to the rest of society. It is this lack of cohesion that allows predators to target these sectors with impunity in order to dismember them.
Much has been made of the lack of resilience and independence of supply chains over the past year. No one seems to notice that the primary dependency is on the supply of financial resources. This is despite the fact that Western economies have been operating at low or even negative interest rates for years. Because states have to be financed. Because some of these states are unable to manage their operating expenses and obligations. The problem of cohesion is ultimately one of policy, and more specifically of state capacity.
The seriousness of the problem should not be underestimated
To summarize: ESG criteria will have to play a key role in coordinating a system characterized by low rates. The importance of this point must now be understood by all. What also needs to be understood is that this context of low or even negative rates is one symptom among others indicating that the system is in the midst of a delirium. Delirious, but relatively cohesive. Faced with this development, realistic, non-devilish sectors that are not cohesive with the delirium, such as defense and energy, become potential prey. Will companies in these sectors outlast the delusion? Or will they go on the offensive – and with what means? In any case, this state of affairs is made apparent by the crises it undergoes, in the shadow of which alternatives are developing. To develop these alternatives, it may be necessary to participate in the ambient madness, as Elon Musk does. It is not clear where the madness stands in service to a higher realism, and where it is the other way around. A key question is: how many systems are in competition?
I’ll end with a personal anecdote: a few years ago, I brought some elements to feed the speech of a director working for a large energy group. Her speech was about digital colonization. The polycentric world of the Greeks, so fertile in new knowledge, was thus contrasted in a passage of her speech with the centralized and not very innovative world of the Romans. The lack of feminism in these societies was, of course, duly noted. But nevertheless, Greeks and Romans were mentioned, because their history portrays a universal lesson, a lesson for a future polycentric world in the making. I mention this anecdote because it seems to me that historical depth is an essential element of any powerful vision, even if it requires questioning. It is a paradoxical idea for some, but it is really the only way to get out of the reactive posture. The dominant strategy in the face of a hostile narrative is a more powerful narrative.