How are we to understand the spread of the notion of capacity building in neighbourhood regeneration and policies to fight social exclusion? In this article, capacity building is understood as central to the mode of contemporary governance and the strategies of ‘the third way’ in England and Denmark. The article explores the concept of community capacity building and its relations to social capital. It argues that the Foucaultian concept of ‘management of possibilities’ is a useful ‘grid of intelligibility’ for a mode of government that works by constructing particular subjectivities of inclusion. It argues further that Bourdieu’s notion of ‘habitus’ enables analysis of how processes of capacity building are embodied and how the capacity building approach is legitimized. Using local experiences of neighbourhood regeneration, it discusses how community capacity building depends on particular forms of social capital and involves the naturalization of particular capacities. The advantage of this perspective lies in disclosing how inclusion becomes dependent on acquiring a particular curriculum of capacities relating to the area and its inhabitants.