I’m thinking of Mansa Musa destabilizing economies due to the mass influx of gold and the Spanish crashing their own economy due to silver. If the economies crashed like this, clearly some type of economic system and economic understanding must have existed. If this is the case, how did people like Mansa Musa or the Spanish not have the foresight to not destabilize economies?
Three issues spring to mind:
Do we understand economics now? Macro-economic forecasting is notoriously inaccurate. And a further problem is that the economy includes people who make decisions based in part on their expectations of what decisions other people might make, and furthermore they can update those expectations over time. So, if policy makers see an empirical relationship in the past between some variable a policy can affect (e.g. interest rates) and some variable of interest (e.g. employment) and try to rely on that relationship for policy making, the relationahip might fall apart. (This critique was made by Robert Lucas in 1972, for which he won the 1992 Nobel Prize in Economics).
Even fairly simple and obvious economic ideas (such as that for every buyer there must be a seller and vice-versa; or that the end purpose of the economy is consumption, not production; or opportunity cost) are unintuitive and takes years to get in the habit of thinking in such terms. Back in 1992 the experienced economic historian Deirdre McCloskey (under the name Donald McCloskey) wrote that it was basically impossible to teach even a grad student to think like an economist, with the exception of a few naturals, people learn about economics but only really grasp it once they have spent years teaching or making policy advice.
Governments are often constrained in what they can do by the need for political support, be that from the army, or mighty lords, or some marginal voters. Think of the importance of Iowa farmers in US politics.
Once I add it all up, I, at least, find it amazing that any country achieves any economic stability at all.
And, in 20th century, we do see various outbreaks of economic instability even in developed countries: consider for some examples:
the Great Depression (of which the economics profession's understanding was radically changed after the 1963 publication of *A Monetary History of the United States, 1867- 1960., by Milton Friedman and. Anna Jacobsen Schwartz - as I said, do we understand economics even now?).
the stagflation (high inflation along with high unemployment) across the developed world in the 1970s
the German hyperinflation of 1923
the Republic of Ireland's low growth and incomes from independence in 1921 until the 1980s
etc, etc.
And of course the 21st century is already generating its own lists of instabilities.
So, in summary, bad economic decisions are hardly unique to the middle ages.
Sources
R Fildes, H Stekler, The state of macroeconomic forecasting, Journal of macroeconomics, 2002, http://haghshenas.com/PhD%20thesis/articel%20sources%201st/The%20state%20of%20macroeconomic%20forecasting.pdf
D. McCloskey, 1992, Other Things Equal, The Natural, Eastern Economic Journal, http://www.deirdremccloskey.com/docs/graham/natural.pdf