This paper attempts to trace the genesis and consolidation of a class of rich peasants in the districts that now constitute Bangladesh. It is argued that at least in some areas a powerful class of well-to-do peasants existed even before the British introduced the Permanent Settlement. Furthermore, far from creating a situation where a more or less homogeneous body of peasantry were helpless in the face of unchecked exploitation by the zamindars, the Permanent Settlement in fact ushered in a period of class struggle between zamindars and rich peasants, but also, and increasingly, by the partly or wholly expropriated poorer peasants. It is suggested that by and large, by the first or second decade of this century, the rich peasants had in most areas of the country wrested effective economic and political power from the zamindars. The new rural power elite, who continue to dominate the rural scene today, are rich-peasants-cum-petty-landlords who were recruited partly from the richer strata of the peasantry and partly from the ranks of intermediate tenureholders.

Farm level data as used in this paper show that farm households in Bangladesh agriculture have considerable surplus (surplus being defined as income minus consumption of ‘essential goods’) and that surplus varies positively with farm size. However, reinvestment of surplus in productive agricultural uses was found to be negatively related to farm size. Explanation this phenomenon was sought in some technical and structural constraints imposed on productive use of surplus. One particular argument that rural credit market diverts capital away from productive uses was not found to be sufficiently convincing. The evidence on the contrary seems to vindicate Schultz’s argument that investment is a function of profitable investment opportunities.

Unemployment of the graduates is becoming a serious problem in Bangladesh. And the problem cannot be dismissed as a mere job-search Phenomenon. Analysis in this paper indicates that the phenomenon can be explained by the simultaneous operation of forces acting from both the demand and supply sides and a less than perfect operation of the labour market for graduates. Employability appears to be an important factor affecting the demand for graduates as there is support for the existence of a systematic relationship between the incidence of unemployment and the relevance of education for the jobs available. Thus a kind of structural imbalance does seem to exist in the labour market for graduates. The problem is further aggravated by the type of expectations that is generated amongst the graduates by the content of curricula, environment of the educational institutions, the incentive structure in the labour market and the whole system in general. The ultimate result is a mass production of graduates, a large number of whom are not wanted by the labour market.