This article questions the value of seeing social capital as the panacea. For this reason, the paper calls for a new theoretical and empirical work to address social capital research problems. One of the major problems is that social capital is ill-defined. Another issue is the lack of clarity in terms of the direction of causality, and lack of focus to the possibility of the negative outcome. Nevertheless, the author acknowledges the contribution of social capital studies to the understanding of both US domestic and development problems. Social capital analysis has been useful to emphasize the importance of socioeconomic behavior, which economists have often undermined, and the importance of non-market relationships in determining individual and collective behavior. Ethnic homogeneity is common with strong social capital. Nevertheless, there is a need to assess both inter and intra group relations in order to understand undesirable effects.