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Both historically and actually, there is a complex interrelationship between the existence of unfree labour and the process of class formation and struggle in the course of agrarian transformation. However, much current writing about rural labour in the Third World is based on three interrelated assumptions. First, that labour market imperfections are always the fault of peasants resisting the attempts of capital to proletarianize them; second, that capitalist penetration of agriculture always transforms peasants into proletarians, in the full meaning of the latter term; and third, that where these exist (non-urban contexts, backward agriculture, and/or underdeveloped countries), unfree relations are always unproblematically pre-capitalist forms of production destined to be eliminated in the course of this process. In the marxist approach which follows, it will be argued that each of these three assumptions is wrong.