This book explores relationships among democracy, social capital, and community-based mediating structures, focusing on Appalachia because of the obvious failures of market capitalism there. It suggests that mediating structures protect communities from the savage side of market capitalism and promote the democratic prospect by increasing and improving social capital. Part 1 explains Appalachian poverty as the consequence of public policies that tie education, health care, and other forms of human welfare to labor force participation. Theories are presented concerning the social, political, and economic roles of community-based voluntary organizations as mediating structures in redressing social and economic inequality. Part 2 examines 23 community-based mediating structures in central Appalachia, using narratives to convey specific social, political, and economic dimensions of their experience. Their activities focused on small business development, job training and advocacy for women, funding for public education, environmental protection, community educational services, family support, leadership development, domestic violence, housing, advocacy on behalf of persons with low incomes or disabilities, popular education, training of community leaders, primary health care, and public policy advocacy. Part 3 describes successful practices of community organizations related to creating and maintaining community, efficient and accountable management, and producing social and economic change. Appendices list the 23 organizations studied and outline methodology. (Contains approximately 180 references, an index, and photographs.) (SV)