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An efficient method is developed for the microscopic description of the frequency-dependent polarizability of finite-gap molecules and solids. This is achieved by combining the Tkatchenko-Scheffler van der Waals (vdW) method [Phys. Rev. Lett. 102, 073005 (2009)PRLTAO0031-900710.1103/PhysRevLett.102.073005] with the self-consistent screening equation of classical electrodynamics. This leads to a seamless description of polarization and depolarization for the polarizability tensor of molecules and solids. The screened long-range many-body vdW energy is obtained from the solution of the Schrödinger equation for a system of coupled oscillators. We show that the screening and the many-body vdW energy play a significant role even for rather small molecules, becoming crucial for an accurate treatment of conformational energies for biomolecules and binding of molecular crystals. The computational cost of …