How would you value a mineral, a tree, or a plot of land if you knew you’d live a thousand years? Discounting is an economic tool used by corporations, banks, and governments to determine the price of capital — that is, an object’s value, and relatedly, when the object should be sold for profit and whether a venture is worth investing in. Discounting plays a key yet often hidden role in shaping contemporary global politics. While it presents a cold calculation of determining whether to invest in a product, it often shows complicated favouritisms in tacit tug-of-war between past versus present, native versus foreign, local versus globalized, and capital versus capitalizer. Liliana Doganova’s book Discounting the Future: The Ascendancy of a Political Technology (2024) is the culmination of over a decade of her research into the topic of the valuation method of discounting.
The book is organised into five sections that chart both the historical development of discounting and the author’s personal study of discounting. First, Doganova explains how discounting works. Discounting shifts temporality away from the past and present to focus solely on the future earning potential that capital might later accrue. The value of capital is merely a prediction of the future. The paradox is that the future is both overvalued and undervalued: it is treated as the sole repository of value yet discounted so heavily that long-term solutions appear too costly. The author notes that in climate policy, this logic renders today’s money almost meaningless in the far future, pushing responsibility onto later generations. Since today’s money is worth next to nothing so far in the future, climate change becomes a problem for later generations.
The calculation of discounting that many societies now see as natural and inevitable only traces back as far as the mid-19th century. Doganova’s second chapter is about the origins of discounting in German forestry. Forests provide a great case study for discounting because the field provokes questions such as ‘What is a forest worth?’ and ‘When should a tree be felled?’ Discounting recommends a starkly different approach from traditional forestry: using Faustman’s discounting formula, tree rotation length (or when trees should be felled) comes out to one year. By contrast, using contemporary market rates, tree rotation should be 150 years. In general practice, foresters typically use a rotation length between 20-40 years.
Such unorthodox recommendations meant that discounting didn’t gain traction until almost a century later in France and the United States. Throughout her research, Doganova finds that discounting leads to dramatically different calculations and solutions than alternative economic models. She discusses the performativity of discounting, or the ability for discounting to cause action or inaction, citing Foucault’s conception of ‘the market as a site for the formation of truth’ rather than the market as a manifestation of truth. Doganova suggests that the theory of discounting is more rhetorical than rational truth. The investor co-opts this narrative and acts ‘by discounting the future [as] a form of subjectivity, a way of seeing the world and a way of being and acting in the world’ (p. 77). This perception follows a constructivist theory of political science which argues that norms are not fixed but socially constructed.
We see a prelude to the author’s thoughts on the political dimensions of discounting at the end of the second chapter, where she talks about time horizons in three strata. The state can afford to look far towards the very distant future. The forest manager too looks to the future, but only as far as his mortality and single lifetime will allow. By contrast, the poor cannot afford to look towards the future at all. In the case of forestry, this poor stratum is composed of local populations who depend on the forest’s resources. While a resource-rich person would trade a slice of bread now for £1,000 in a month, a poor person must take the slice of bread now because they need to eat. For this reason, poor populations tend to discount at much higher rates than average.
Who benefits from discounting, and relatedly, who is incentivised to discount by the rhetoric of rationality? This is the major question that Doganova tackles in her third chapter on discounted cash flow analysis (DCF) in finance and consulting, and her fourth chapter about the role of the investor as an economic actor. Discounting has an inverse relationship with the willingness to invest. The higher the discount rate, the more the future isn’t worth considering. In practice, discounting’s apparent rationality — a logic that prioritises short-termism over long-term investments — was the rhetoric that ‘managers hid behind to avoid making decisions’ (p. 155). Like in Doganova’s initial case study of forestry and discounting prescribing shortened rotation lengths, discounting led to similar results in areas such as beermaking, where discounting prescribed accelerated bath-fermentation and shortened brewing cycles.
Doganova argues that the method of discounting elevates the investor’s interests over all other points of view. Doganova substantiates this when she turns in chapter four to the drug development industry, in which uncertainty about the future is exceptionally high. With a success rate from the first phase of drug development to drug approval at only 10%, pharmaceutical research and development is exceptionally risky. Doganova suggests that discounting incentivizes investors to bear risk by framing uncertainty as a basis for future rewards — a principle she calls ‘uncertainty capitalized’.
The dangers of prioritising the investor’s point of view were revealed in the 1980s. The United States’ usage of discounting was heavily criticised and unfavourably compared to Japanese and European companies that also prioritised national policy, long-term development, and holistic investment reviews. The implication is that when discounting is prioritised over all else, the economic model poses a threat to a nation’s economy.
Throughout Discounting the Future, Doganova hints at the broader politics of discounting by commenting on the inequalities of whom it benefits and whom it disenfranchises — investors over the poor, the present generation over future generations. Nowhere is this political argument more apparent than the fifth chapter and conclusion. After giving a 2015 lecture on discounting in Chile, an audience member approached Doganova to discuss Chilean 1981 mining law’s usage of discounting. She recounts being surprised to have never heard of this history, given that former Minister of Mining José Piñera’s 1982 law was the first governmental implementation of discounting. The chapter that ensues is no longer about discounting as a theory; it is about discounting as inscribed in constitutional law. Discounting becomes a governing principle that shapes how a state recognizes values, rights, and obligations over time — a legal mandate for how a state thinks about its future. In Chile, the principle of discounting played a central role in Chilean nationalisation, relationships with foreign investors, and their international reputation.
Prior to the 1973 U.S.-backed coup that ousted him, socialist president Salvador Allende attempted to nationalise copper production to reassert his country’s sovereignty and independence. Before the Cold War, citizens believed foreign involvement helped their economy grow. After the Cold War, for many Chilean locals, perception morphed into hostility that investors wanted to ‘mold the subordination of backward nations to the economically powerful countries’ (p. 237). In 1971, Allende implemented a standard for calculating the book value of mining property. The infamous result was to pay the price of zero dollars, and in some cases, determining that investors owed the state money. It is worth pondering the role Allende’s discounting policies might have played in spurring the involvement of the U.S. CIA in the 1973 coup.
Doganova contrasts Allende’s policies with Piñera’s approach a decade later, which was widely revered. Piñera looked towards the future when calculating what investors were owed. His economic model paid investors according to predictions of all future profits, even if those profits would not have been generated in reality. The World Bank thereafter deemed Chile a stable environment for investors, and Piñera’s method was later extended to Chile’s infrastructure sector. By contrasting these two moments of history — with Allende looking towards the past and Piñera looking towards the future — Doganova asks the reader to question why discounting is used, who it benefits, and how it became the powerful political technology that the book’s subtitle paints it to be.
In her conclusion, Doganova adopts a clear stance of condemnation. She quotes Kim Stanley Robinson’s climate fiction novel The Ministry of the Future (2020): ‘There isn’t any moral justification for the discounting, it’s just for our own convenience [that’s] easy to do when [future generations] are not here to defend themselves’ (p. 252). Doganova goes so far as to suggest that discounting is a form of colonisation, whereby the present generation colonises future generations. Not only does discounting disadvantage the poor, but it keeps them in a continued cycle of poverty and environmental degradation because of its emphasis on immediate profits and short-term thinking.
While redundant at times and meandering in her path to reach main conclusions, Doganova’s Discounting the Future: The Ascendancy of a Political Technology offers a compelling account of the hidden political properties of a widespread economic calculation. Her goal is not to abolish discounting, but to spark dialogue about how it functions, whom it benefits or alienates, and the hidden devastation it can inflict on society. These are crucial to broader philosophical debates on climate change to take more responsibility for our actions by considering the voices that discounting ignores in its quest to ascribe monetary value.
Ashley Yung graduated from Columbia University with a degree in English and Political Science in 2024. She is currently a Commercial Litigation Paralegal at Holwell Shuster & Goldberg LLP.