This study makes three propositions. First, the mode of production of pre-colonial South Asia was qualitatively distinct from European feudalism. Instead, Marx's notion of the Asiatic mode of production is more consistent with the historical evidence. Second, the colonial path of capitalist development of South Asia resulted in a socio-economic formation that combined features of the Asiatic and capitalist modes of production, which this study terms Asiatic capitalism. Empirical analysis of agrarian relations in Pakistan reveals the relative absence of wage labour and the continuing existence of various forms of pre-capitalist economic relations within the overall framework of a capitalist economy. Third, the vast majority of the non-agricultural working population of Pakistan today is engaged in handicraft and manufacture. However, manufacturing and services are dominated by petty commodity production and small-scale capitalism. Hence, while being significant in terms of output, the formal large-scale industrial sector, which was developed along the model of state-corporate capitalism, remains relatively small in terms of employment. In sum, the class structure of Pakistan is characterized by this study as Asiatic capitalism.