If we continued with your model and assumed numbers, for this 5 million person kingdom, how many specialized crafters would you predict exist?
In my OP I assumed that even a small number of crafting wizards would dominate certain crafting markets...aka replace a large number of crafters. But the key check in that statement is...how many crafters does the market have? If wizard replace 600 out of 1000 crafters, thats a huge deal. If its 600 out of 6000, its a factor but doesn't completely change the market, etc.
Assuming the 20% urbanization rate, then you'd have 1 million people in urban areas doing work. Very few of the rural population would be crafters, though they'd likely do at least some of the material gathering (eg: wood, leather, wool, etc). Regardless, for simplicity, I'll only work off of a percentage of the urban population.
Then after factoring out underage (about 20%), military/law enforcement (about 10%), and non-professional service workers (eg: merchants, traders, shipworkers, food service, adventurers, etc; maybe up to 60% overall), that leaves about 20% of the population, and I'd probably allocate about half of that to various professional/crafting services, for a total of about 100,000 — not all of which are the masters; there's plenty of apprentices and journeymen in there, and spread across the entire kingdom.
While the full plate armor has been used as an example, that's really only a wizard attempting to dominate a single market. And really, he's only dominating one particular good within that craftspace. There's no reason that the blacksmith that didn't get the full plate armor order didn't make a bunch of rapiers instead. If the wizard tries to fabricate easier stuff, it very quickly reduces his impact on the market.
With 100,000 crafters and an overall population of 5 million, that means each crafter provides products for 50 people per year. However since the crafters should be analyzed in groups based on crafting type, if you choose a dozen main craft types (for simple math), each crafter for each craft type would be providing products for 600 people per year — roughly one product per every other person per day. Which is a reasonable pace, all things considered, since most products are cheap and high-throughput.
Anyway, assuming each crafter generates 300 work days' worth of product each year (50 weeks x 6 days per week), that means the kingdom-wide production is 30 million crafter days per year. The wizard using Fabricate, meanwhile, can generate 30 weeks of production per day, if you use the highest cost basic item, full plate armor. That's 180 days of production, 300 times per year, for 54,000 excess production days (twice that if casting the spell twice).
That's an increase of 0.18% – 0.36% in production in the kingdom per such wizard. Three such wizards using the double casting would be about a 1% increase, which is actually pretty substantial, but still not enough to break the system.
The issue is that crafting skill is fungible (ie: other blacksmiths can make other goods, even if they aren't getting the orders for plate mail), whereas the plate mail market can saturate. 3 Fabricate wizards trying to max their output could get full plate made for 10,000 people in 5 years. Based on my estimation of the military (100,000 total, 10,000 of which would be elite that could make use of the armor), that would be enough to fully equip the portion of the military that the armor would be useful for.
At that point it tanks the amount of impact that the Fabricate wizards can have on the economy, losing (at least) about 75% of the value that could be obtained during the peak plate armor years because it's hard to get the same effort scaling.
It'll be a gold rush when people try to cash in on it, but it will mostly burn itself out within a few years. Even during the gold rush, if you have multiple competing wizards each trying to squeeze as much out of the market as they could, each will probably try to undercut the others to the point that they aren't gaining nearly as much profit per suit of armor as the default prices imply. Further, regular merchants are almost certain to move to block out the Fabricated equipment from the market. They have the experience and the contacts to make contracts and get laws passed.
They don't even have to go after the wizards themselves. Go after any merchants selling armor that hasn't been stamped with the seal of an approved craftsman or quality control (real world example: diamond market), and the wizards just won't be able to
sell their goods, which leaves them stuck. Maybe try via black market, but that means you're giving up control and profit, and risking
other legal repercussions.
Since people aren't dumb (and
are greedy), you can probably assume that this gold rush has already happened in the past, and thus is largely irrelevant in the present. I would even expect a few families to have made their fortune during that time, possibly with lingering grudges against each other, and a lot of legal mercantile bureaucracy left behind as a legacy.
There's still
some money to be made using this, but it's not a pot of gold for players, nor a destabilized economy. The only extra clarification I might add in is that you can't Fabricate unique/personalized/highly custom products. Fabricate requires an extra level of skill just to make ordinary weapons and armor; it's not sufficient to make the high priest's robes, or Inigo's rapier. Top-end product markets flat out cannot be usurped by Fabricate wizards. (This also further limits production time scaling advantages, since you're just left with standard market goods.)