Although it is not easy to define the term obraje with precision, most documents from colonial Mexico used the word in the sense of "textile manufactory." People sometimes spoke of obrajes de tejer (or hacer) paños (obrajes to make cloth) to distinguish them from obrajes that made shoes, hats, or other goods. The very specific distinctions made between complete obrajes (e.g., obrajes that had fulling mills for finishing woolens) and presumably incomplete ones were almost never used, especially by the end of the colonial period.
Obrajes were never mechanized, even in the late eighteenth century. Spinning and weaving inevitably were done by hand. Obrajes were integrated vertically as well. The largest ones brought together virtually all stages of manufacture, frequently in one building. The only exception was spinning (and fulling). Because so many spinners were needed to provide yarn for weaving, spinning often was put out (i.e., subcontracted to individual workers who were paid on a piecework basis and produced the yarn in their homes). Fulling mills usually were separated from Obrajes, probably because of the expense involved in constructing them. In some cases, Obrajes and ranches were owned by a single person, family, or kin group. The arrangement secured an adequate supply of raw materials such as wool and carried principles of vertical integration to its logical conclusion.
Vertical integration gives some insight into the nature and rational of the obraje in New Spain. Vertical integration may reflect technical considerations. Even though most Mexican Obrajes never produced anything other than coarse woolens, the technical demands of making woolens of any sort are not insignificant. Selecting, preparing, and processing raw wool require specialized knowledge. Even though the native peoples of New Spain were famously skilled artisans, and although they learned to work with wool quite rapidly in the sixteenth century, Obrajes never were regarded as centers for the accumulation or diffusion of technique. To a significant extent, Obrajes operated with forced labor of various kinds. Convict labor was sometimes employed, and debt peonage was not unknown. Such workers rarely were recruited for their skills. They required close supervision to produce an acceptable product, and it was in part for the purpose of organizing and supervising a labor force of indifferent ability that Obrajes were suited.
Yet it was not just the difficulties involved in working with wool that explain the vertical integration of the obraje in New Spain. The obraje was a centralized firm, and centralized firms exist because the costs of coordinating markets are substantial. In the abstract world of pure competition, the costs of market coordination are negligible. Centralized firms are unnecessary, for everything can be produced by external suppliers. Technical considerations and the existence of economies of scale aside, there would be little reason for factories to exist. But the economy of colonial Mexico was far removed from pure competition. Markets thrive on abundant information, enforceable contracts, and predictable responses from consumers and suppliers. None of these characterized the economy of New Spain, in which information moved slowly, property rights often were defined vaguely, and large economic changes were influenced profoundly by intrinsically unpredictable and unstable agricultural forces.
Nevertheless, in an equally basic way, Obrajes were an outgrowth of colonialism. There are two ways in which this was true. First, international trade with New Spain was regulated by the principle of the exclusive right of small groups in Spain to supply the colony with European products. Even though the principle of exclusivity was violated widely, both the risks of smuggling and the generally high costs of ocean shipping reduced the available supply of imported goods, including textiles. Those goods that did make their way to New Spain were relatively expensive, which limited the demand for them. There was then ample scope for colonial producers to supply common manufactures for everyday use. Even though industry in New Spain violated the mercantilist notion of enlarging the trade surplus of the mother country, Castilian authorities rarely intervened in colonial production, particularly after the sixteenth century. And when they did so, it was almost never to protect Spanish industrial or commercial interests.
The second way in which colonialism shaped Obrajes was more subtle. Some economic historians argue that the factory was organized by capitalists to give themselves a larger share of the surplus than would have been available under alternative arrangements, such as the putting-out system. In New Spain, where the assumption of the inferiority of the indigenous peoples was a commonplace, ethnic differences between the capitalist class and its agents—most notably Iberian or criollo—and the labor force—a heterogeneous mix of Indians, mestizos, blacks (many of whom were originally African slaves)—reinforced socioeconomic hierarchy. The vertical integration of the obraje drew upon and reinforced a labor system based on rigid subordination and racial oppression. Ethnic differences provided the social rationale for the Obrajes, even as economic and technological