[As an aside, that's just great --- the crusaders facilitated the introduction of arithmetic into Europe, the modern crusaders ... opium! How's that for divine justice].
The knowledge inequities that having merchants trained in arithmetic and others not so trained, created instant opportunities for swindles and other misdeeds. Indeed, this seems to have been the point of nascent capitalism all along. Dr. Fayazmanesh summarizes his main point as follows ...
It seems that the medieval economic authorities of the time, the scholastic monks, combated these emergent economic practices in much the same way that many of our economists seem to want to tackle our current economic problems. By insisting on wiser regulations both personal and systemic. People should learn to control their temptations to unfairly take advantage of others, and wise governments should put in place and enforce economic regulations that would curtail abusive market behavior while not killing the incentives to realize a reasonable "just price" for one's marketing of goods and services.
To make a long story short, in the medieval markets arithmetic became a tool, a “financial innovation” to use the language of the modern market, to make more money. The rule of the game was to take advantage of arithmetical ignorance of others to gain as much profit as possible. This was how capitalism was born. It was born not of honesty, equality, justice or fairness in exchange, but of deceit, swindle, inequality, injustice and unfairness. It was also in this same period that one can find the emergence of many other financial innovations, such as forward contracts and bills of exchange, innovations that tried to increase profit by reducing uncertainty and risk. [accessed Jan. 25, 2009]
Dr. Fayazmanesh argues that today's search for an economic equilibrium, a balanced or sustainable economy is no more likely to be realized that it was seven centuries ago. The reason being that manipulating the ignorance of market participants to maximize profits has always been a central feature of capitalism and will remain so well into the future. The calls for greater, wiser regulation of markets and personal desire will be no more effective now that it was then. The system will continue with its peaks and valleys, its swindles and moral approbations from authorities outside of the market itself. The essay concludes,
It is interesting historical take on the historical patterns of capitalism. Indeed, it reminds me very much of the way markets entered into the islands of Micronesia, where I have done much of my fieldwork [interested readers should check out the Micronesian Seminar's video history series.] One sees a similar flow as merchants wash ashore in search of profits (and swindles to promote them) followed by the arrival of Christian missionaries who seek to help undo the moral and material damage to Islanders as a result of the rapaciousness of the traders and the goods they trade.
Even if the current economic proposals are implemented, we should not expect to see “toxic” mortgages, “troubled” assets, “exotic” financial instruments, and Ponzi schemes to disappear from the market for good. Instead, we should expect every regulation to be followed by deregulation and, then, the cries for reregulation. We should also expect the creation of even more “exotic” financial instruments. That has been, since the age of “commercial revolution,” the pattern of development of the market system and there is no reason to believe that such a pattern will change.
There is certainly more to the story than I have time for this AM. However, I think that there is a point that Fayazmanesh misses. That the great institutions of the West emerge in interaction and contest with one another. The market may in fact promote a certain class of rapacious actors, but this only adds to the strength of the message of other segments of society whose interests do not lie with those of the financial and merchant classes. A dynamic of sin and salvation is very much part of this system, not simply the interests and behaviors of the merchant class themselves. It is a matter of political economics, not merely economics.