This paper explores the relevance of extra local market linkages and local-level social capital to sustainable livelihood outcomes in two agrarian communities on Mexico's Baja Peninsula. Contextualized by the specificity of Mexico's transition from state-directed rural development to neoliberally-guided rural development in the 1990s, findings suggest that market linkages can intersect with pre-existing social capital to both create new and destroy preexisting social capital, thus shaping the direction of development and inequality outcomes. The nature of a community's social fabric is often a result of long-standing historical legacies. In the communities presented, the quantity and quality of social capital was intricately connected to their history of state-sponsored or market agriculture; the nature of local institutions, with particular emphasis on the formation and evolution of the "ejido"; and the access to and availability of natural resources, namely land and water, which are both intricately connected to market access options. Moving beyond a simple demonstration that social capital matters, this analysis explores the complex and dynamic interaction between local-level social capital and extralocal market linkages. In doing so, it contributes to the larger debate on how the historical legacy of populist reforms and the social and political institutions created during state populism have nuanced the trajectory of neoliberal development in Mexico. (Contains 9 footnotes and 2 figures.)