Systems approach and discounting: A need to think globally and act globally

Abstract

This paper argues against using the practice of discounting and shows that both the time preference and the opportunity cost of capital arguments, put forward to justify discounting, are in conflict when we take the holistic approach to the environment. Both the time preference and the opportunity cost concepts are the tools to support the institution of interest. Using hierarchical systems approach argument the paper emphasizes that in order to save the super hierarchical system (humanity as a whole and biosphere as a whole in our case) the capitalist economic system has to undergo into the release phase to allow renewal through the emergence of an ecological economy so that the humanity and global ecosystem may persist.