In mid-February, the government of Pakistan struck what many saw as a humiliating accommodation with Taliban guerrillas in the Swat Valley, a former princely state and tourist destination in the lush foothills of the Karakoram Range, about 150 miles north of the capital, Islamabad. The Taliban have terrorized Swat for the past two years in an effort to impose their particular vision of Islamic justice on the local population: Their tactics have included decapitation, public flogging, and the destruction of several hundred schools. In exchange for a military truce with the militants, who had fought the national armed forces to a standstill, the government agreed that Islamic law, or Shari’a, should supersede Pakistani law in Swat whenever the two systems came into conflict.

Class is destiny in Mueenuddin’s world: Some of his most memorable characters are menial strivers who come to grief when they try to improve their lot in life.

Simultaneously, a 45-year-old Pakistani farmer named Daniyal Mueenuddin published In Other Rooms, Other Wonders, an acclaimed collection of short stories set mainly in rural Punjab and in the Punjabi capital, Lahore. Mueenuddin writes about the Pakistan of a generation ago, when the old feudal system was giving way and new industrial fortunes were being made, but nobody was yet worried about jihadists taking over the Swat Valley, let alone the entire country. Several stories appeared first in the New Yorker; the rich cast of characters includes languid landlords who sell off their patrimony to keep up appearances, scheming retainers, striving poor relations and rivalrous servants. Because he captures a society in transition from an agrarian, aristocratic order to a more-fractured industrial modernity, Mueenuddin’s work evokes 19th-century Russian masters like Turgenev and Gogol, along with the Southern Gothic tradition of Faulkner and Truman Capote.

Mueenuddin is the bilingual son of a prosperous Pakistani landowner and civil servant. His American mother was a reporter for the Washington Post; his parents met in Washington, D.C., in the late 1950s, when Mueenuddin senior represented Pakistan in treaty negotiations with the Eisenhower administration. Mueenuddin grew up in Lahore and on the family farm in Rahim Yar Khan, a rural district in southern Punjab. At 13, his parents packed him off for boarding school in Massachussetts; subsequently he attended Dartmouth College and Yale Law School. As an adult, Mueenuddin practiced law in New York City for a while but has otherwise devoted himself to writing fiction and running his ancestral farm. In an autobiographical note that he produced for his Indian publisher, Mueenuddin writes: “Half-Pakistani and half-American, I have spent equal amounts of time in each country, and so, knowing both cultures well and belonging to both, I equally belong to neither, looking at both with an outsider’s eye.”

As you might expect from his complicated background, class figures prominently in Mueenuddin’s fiction. Most of his stories revolve around K.K. Harooni, an elderly Punjabi landlord whose well-ordered world is slowly crumbling around him. Class is destiny in Mueenuddin’s world: Some of his most memorable characters are menial strivers who come to grief when they try to improve their lot in life. In the title story, one of Harooni’s poor relations insinuates herself into his household, and later his bed. But after Harooni’s death, his cosmopolitan daughters instantly close ranks against the interloper. “Provide, Provide” traces the rise and fall of Harooni’s overseer, a tough, middle-class Punjabi who gradually seizes control of his master’s land and launches a career in politics, but is unable to ensure an equally prosperous future for his sons. In “Saleema,” the title character is an ambitious maidservant who sleeps with Harooni’s cook and valet in an effort to cement her position in the great man’s retinue. When Harooni dies and his household is dispersed, Saleema winds up begging in the streets with her infant son to support her drug habit: “She cradled the little boy in her arms, holding him up to the windows of cars… And then, soon enough, she died, and the boy begged in the streets, one of the sparrows of Lahore.”

Like Mueenuddin’s father, Harooni belongs to what Pakistanis call the “feudal” class. In the West, the term “feudal” has a rather musty resonance: It evokes medieval European barons and, more recently, Marxist invective. In Pakistani English, the term connotes a great landowner who wields political power because he commands the votes of the peasants who work his farms. Pakistan’s feudal grandees belong to the old, tightly connected Anglophone elite that dominated Pakistan’s three ruling institutions during the decades after Partition: the army, the civil service, and the elected government. With power came prestige: When I worked in Lahore as an anthropologist in the mid-1990s, a local tailoring shop proudly displayed the following sign: “Ossian Tailors, Stitched and Stitching, for Elites and Feudals.”

Nowadays, Pakistan’s feudal class is on the back foot, to use a cricketing metaphor that the Oxford-educated K.K. Harooni would have instantly understood. A new order of middle-class industrialists emerged in the 1980s, epitomized by former prime minister Nawaz Sharif, a Lahori businessman whose rivalry with the Sindhi feudal Benazir Bhutto defined Pakistani politics in the 1990s. Meanwhile, the first generation of Sandhurst-educated, polo-playing, pig-sticking generals ceded control of the army to a more indigenous crop of middle-class officers, notably the country’s two most recent military dictators, Zia ul-Haq and Pervez Musharraf. By all accounts, many of this new military generation are sympathetic to the jihadi militants whom the army nurtured as proxy weapons against Soviet troops in Afghanistan and later, against Indian forces in the disputed territory of Kashmir.

Mueenuddin distances himself from the “feudal” label, with its whiff of entitlement and oppression. “I’m a small landowner,” he told me over a scratchy long-distance phone connection from Islamabad. “In the most positive sense of the word ‘feudal,’ I maintain [ties] of mutual obligation with numerous people that flow from our relationship to the land. My obligation is to provide them with a livelihood. In return, their obligation is to make sure the farm operates smoothly and successfully. But I hope to distinguish myself from other feudals that I know, who require local people to vote for them and use that to maintain their hold on power.”

Mueenuddin is a prodigiously talented writer, capable of imagining the inner lives of Punjabi aristocrats and their servants with equal sympathy, precision and power. But how do his stories help us understand contemporary Pakistan? Part of the answer, I think, lies in his preoccupation with social justice. Mueenuddin’s characters inhabit a profoundly unequal world in which a destitute majority toils to provide comfort for the privileged few. This same concern with injustice has motivated Pakistan’s various political-reform movements, from the Islamic socialism of Zulfikar Ali Bhutto in the 1970s to the Islamic radicals of today. Even though there are no jihadi characters in Mueenuddin’s fiction, his work implies the Taliban.

“He’s writing about the social structure that gave rise to Talibanization,” says Mohsin Hamid, a Lahori writer who has published two well-reviewed novels set in contemporary Pakistan. “The Islamist parties all have a certain degree of egalitarian motive: justice for all, speedy justice and so forth. Their appeal comes from the Byzantine restrictions and complexities of the feudal structure.”

Mueenuddin represents a new generation of Anglophone Pakistani writers who have set out to portray their tumultuous society for a global literary audience. Others include Hamid, whose second novel, The Reluctant Fundamentalist, tells the story of an expatriate Pakistani yuppie who finds himself sympathizing with the attackers on September 11, and Kamila Shamsie, the Karachi-based author of several witty novels ( In the City by the Sea and Kartography, notably) that trace the lives and loves of her embattled city’s bourgeoisie.

Mueenuddin stands out from this accomplished crowd in that his characters span the entire range of Pakistani society, rather than focusing mainly on the urban elite. “Most South Asian writing is urban,” says Moni Mohsin, a London-based Pakistani writer and journalist whose powerful first novel, The End of Innocence, traces the abduction and murder of a rural Punjabi servant girl, set against the backdrop of the 1971 Bangladesh war. “And modern Pakistani writers tend to be self-consciously political, writing about Pakistan for a Western audience. With Daniyal, it feels more organic: He knows his subject very well and writes with great compassion.”

“Pakistan is a desperate place,” Mueenuddin says. “We’ve got poverty, overpopulation, and a complete lack of health care and education. Any time people are desperate, they’ll take desperate measure to ensure their survival.” For Mueenuddin, this largely explains why his home district, Rahim Yar Khan, has become a central Taliban recruiting ground in recent years. “The local people send their kids to madrassahs because they can score a meal there,” he says. “That’s the only reason.”

Meals are scarce in Pakistan because jobs and educational opportunities are limited. In my experience, few local landowners subscribe to Mueenuddin’s enlightened take on the feudal mode of production. Pakistan’s secular intelligentsia is well-intentioned but politically powerless. And until September 11, 2001, successive US administrations tacitly supported the Pakistani establishment’s embrace of the jihadi guerrillas who later turned on their patrons, bloodying the Pakistani army in Swat and in the tribal territories along the Afghan border. With friends like these, it’s not surprising that the Taliban have grown so powerful. If class is destiny in rural Pakistan, then blindness is destiny in geopolitics.

Richard McGill Murphy is the editor of Fortune Small Business magazine. He holds a doctorate in South Asian anthropology and has lived and traveled extensively in Pakistan. Murphy’s memoir, Lahore Nights , is forthcoming from Knopf.