Membership and citizenship within an embedded theory of democracy

Abstract

While the main economic theories regarding the third sector argue that nonprofit organisations arise as institutional solutions to government and market failures, their role in influencing public and market outcomes are far less explored in economic research. This gap can be filled by borrowing from the social capital literature that provides a more highly integrated vision of the relationship among the three sectors. From this overturned perspective, the paper suggests an embedded theory of democracy in which civil society organisations play a crucial role in making democratic institutions work, by shaping social relations among citizens through equal and inclusive membership structures.