With regard to the period between the 1530s and 1640s, the great Marxian historian Steve Stern divides the economic system that prevailed in the area around the city of Huamanga in Peru—and, by extension, the system in much of Spanish Latin America—into three stages.
The first stage, lasting until the 1570s, was dominated by encomenderos and priests who pioneered relationships with local Andean societies. (An encomendero was a “Spanish colonizer in whose charge the Crown ‘entrusted’ Indians, from whom the encomendero could collect tribute and labor services in exchange, presumably, for tending to the natives’ spiritual and material welfare.” This system of encomiendas—a term that denotes the grant of Indians to an encomendero—was, as you see, quasi-feudal.) “Colonials [i.e., the Europeans] depended greatly upon uneasy alliances with ethnic societies and their chiefs to secure the labor and goods they needed: labor for construction, transport, mines, textile manufactures, artisanry, agriculture, and ranching, and goods ranging from precious metals to basic foodstuffs to an enormous variety of handicrafts.”
In the 1560s this system started to break down under Indian resistance to Europeans’ demands for larger and more stable supplies of labor to work newly discovered mines. Also, radical Indian politico-religious movements threatened Spanish power. The colonial state was too weak to do much about these problems until the viceroy Toledo stepped in in the 1570s and reorganized the whole economic, political, and social system. He made the state much stronger, in fact instituted a “state form of extraction” defined by tributes and the mita, a “colonial forced-labor draft institution providing rotations of native laborers to selected beneficiaries of the state.” “The mitas, especially, made it possible to mine and refine large quantities of mercury and silver, to manufacture textiles in obrajes [i.e., workshops] employing the labors of a hundred or more Indians each, and to advance commercial agriculture and ranching.”
Again, though, Indian resistance—and population decline—eventually caused major problems. “Huamanga’s native peoples adapted to the rise of state-sponsored extraction by engaging in aggressive, persistent, often shrewd use of Spanish juridical institutions to lower legal quotas [for tributes and mitas], delay delivery of specific corvées and tributes, disrupt production, and the like. Threatened with instability, legal entanglements, and a growing squeeze on their labor supply, elites had to resort to alternatives that might shield them from judicial politics, and assure more direct control over a clientele of laborers and dependents.”
By 1630 or 1640, therefore, private forms of exploitation had grown more important. “Yanaconaje [i.e., “an institution of long-term personal bondage attaching [retainers or serfs] to masters”] and other forms of peonage, wage labor and work contracts, extralegal tributes and corvées arranged through [Spanish magistrates] or other functionaries—these, along with African slavery, represented the dynamic, growing forces of the early seventeenth century.” All three of these forms of economic exploitation, even the “private” form (except when it involved wage-labor), bore distinct resemblances to feudalism and/or slavery.
The labor system which matured in early seventeenth-century Huamanga thus differed sharply from the one with which the colonials began. Exploitation had evolved in three distinct stages, and in each case the transition from one phase to the next bore witness to the impact of native resistance on colonial policies and strategies. In the 1560s, Indian activity led to a crisis of the colonial system as a whole.... In the 1570s a powerful reformist state rescued the colonials and launched a new era of political control and economic prosperity. A half-century later, Indian resistance no longer threatened European hegemony or the social and economic structure as a whole. But conflict had continued, and native activity created a labor problem which, again, forced elites to modify social and economic strategies. Shortages, bottlenecks, and disruptions affecting specific enterprises, rather than a generalized crisis of colonial rule and extraction, rendered official Toledan institutions obsolete, and spurred a further evolution in Huamanga’s history of labor.
Incidentally, the conventional narrative that Spaniards came in, destroyed Indian society wholesale, and built their own colonial structures on top of the ruins is simplistic. Traditional kinship structures and forms of social organization persisted for a long time; the colonials used them to organize the extraction of surplus labor. By the late sixteenth century, incipient class contradictions in Indian society—between chiefs and their kinfolk, for example, and between a small Indian elite and the peasant majority—were growing, such that some natives were in a “contradictory class location,” sharing certain interests with the colonial system that gave them a degree of power and wealth and other interests with their peasant kinfolk who were harshly exploited. But it took a very long time for colonial expropriations and the burgeoning commercial economy to so undermine the self-sufficiency of local Indian societies that traditional structures disintegrated. (By the early seventeenth century their slow disintegration was very visible but by no means remotely complete.)