Law and economics
Wolff himself was not a lawyer in our sense; after 1740, he held a chair of public and international law, but this was quite different from ‘positive’ (material) law which corresponds to the twentieth-century understanding of the term.
His direct contribution to (positive) law is slight (but see Nettelbladt, 1754); his indirect influence via his legal students, especially Johann Ulrich von Cramer (see Cramer, 1742-67; Drechsler, 1996), is much more important, but neither appears to be particularly focused on law and economics. Rather, Wolff’s importance for this area, as has very recently been argued, lies elsewhere.In what constitutes the key essay on Wolff’s significance for law and economics, Jurgen Backhaus (1997) has said that ‘Wolff conceived of both law and economics still largely as one discipline and therefore was able to integrate naturally what has today to be integrated conscientiously, and with effort’ (p. 129). Backhaus goes on to argue:
[I]n economic policy analysis),] next to problems of allocative efficiency, issues of distributive justice or equity play an important role. However, these economic discussions of equity issues typically do not even refer to the legal framework in which they ultimately have to find their application. This creates the possibility that the results of an analysis of welfare economics can be in direct conflict with legal realities. Ultimately, the latter prevail and the ignorance of the legal framework in which economic policy needs to be implemented leads to the impossibility of applying the results of economic theoretical work in practice. Wolff already talked about this problem which plagues modern economics to the extremes, and he insisted on the need to do the legal and economic analysis in tandem. (p. 133)
The aim of the state is, for Wolff, the self-sufficiency of individual houses, or households.
This seems to go both against all classical economic theory, which focuses on a smaller unit (the individual) and against continental Nationalokonomie, which focuses on the state, but Wolff’s approach of considering the household, whence the term ‘economics’ stems in the first place,2 allows him to develop a model of the welfare state, including a sophisticated approach to subsidiarity (see Backhaus, 1997, pp. 135-9). This model is all the more important today because the built-in subsidiarity approach is one of the few effective insurances against the overinvolved state which any welfare state, to which there seems to be no realistic alternative in Western countries, tends to become (see Drechsler, 1995, pp. 227, 230; 1997b).Public policy is exclusively defined in terms of social welfare, and it is limited by the ability of the households to take care of their own affairs. The primary task of the welfare state is the support of the households in such a way that they can take care of their own matters in finding the means for their existence.... For this purpose, Wolff already argues for the modern economic policies of full employment, the stability of the currency and even environmental policy. (Backhaus, 1997, p. 134)3
The possibility of using the implications of Wolff’s ‘pure’ philosophy as a countermodel to (neo-)classical economics has been raised by Reinert and Daastol (1997). On the basis of Wolff’s so-called ‘German ethics’ (1733), they make the case for the growth-centredness and dynamism of this approach, and of Wolff as a founding father of evolutionary economics: ‘The English classical economists focused on the incentives of the market place as an external driving force for man. Wolff, although acutely aware of the role of markets and contracts, emphasizes Man’s inner drive for learning, creating and innovating’ (1997, p. 264). Reinert and Daastol conclude by stating that ‘in order to understand the knowledge-based society[, the] time has come to focus again on the Wolffian tradition’ (ibid.).