The World Bank and the International Monetary Fund (IMF) endorse social capital to solve poverty and inequality. Colombia proposes urban school reform (Escuelas Nuevas) to increase its social capital. Social capital is accepted by ‘indigenous researchers’ without considering its societal and political context. The psychology of Martín Baró and Freire' de-ideologises such social capital concepts. Interviews with individual teachers, community members, and focus groups of elementary school parents and students were analysed for the consequences of Escuelas Nuevas for social capital, and for peace-building and reconciliation of violent conflict. Social capital did not stand in place of social justice programmes. Using social capital to redirect efforts against social inequalities constitutes ‘structural violence’ perpetuating the colonisation of indigenous communities.