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This article argues that housing reforms imposed by the military regime, and largely preserved by the center-left Concertación since the 1990 transition to democracy, represent substantial impediments to collective action and the development of social capital among Chile's urban poor. In particular, housing policy exacerbates social stratification, reinforces workers' vulnerability to market forces and undermines social trust. These dynamics and the institutional structures which perpetuate them constrain social cohesion and collective action among the urban poor. The broader implication which this research suggests is that social reforms structured in a manner similar to Chile's housing program vitiate the cohesion of disadvantaged communities, thus making it difficult for them to work together to improve their welfare and to hold public officials accountable. The World Bank, Inter-American Development Bank and other development institutions would do well to consider these negative repercussions of targeted assistance programs (as typified by Chile's housing program) if they are indeed serious about addressing the social dislocations wrought by structural adjustment and strengthening democracy through the promotion of social capital.
