Social capital has become a popular term over the past two decades amongst researchers, policy makers and practitioners from varied disciplines. This popularity, however, has resulted in a great deal of confusion over the nature and application of social capital in different contexts. This confusion has made it difficult to identify and measure social capital within the evaluation of specific social and health programmes, one of the aims of which may be to stimulate social capital. This paper identifies a theoretical model that seeks to capture the dynamic nature of social capital to assist in the development of research methods that will facilitate its measurement and exploration within such programmes. The model reported in the paper identifies the key components of social capital and expresses the relationship between those components in a dynamic system based on Marx's description of the process of capital (economic) exchanges expressed in the M-C-M' cycle. The M-C-M' cycle is the transformation of money (M) into commodities (C), and the change of commodities back again into money (M') of altered value. The emphasis within the paper is on the capital element of the concept and its transactional nature with the aim of avoiding the pitfall of attributing social capital in relation to social behaviours in isolation of context and interaction. Importantly, the paper seeks to distinguish the central elements of social capital from some of the antecedent factors and outcomes often attributed to and confused with social capital adding to the problem of providing valid measurement. The model is presented as the basis for the measurement of social capital within a transactional process involving the investment of social resources in a cyclical process, which may result in net gains or losses. This process is described as the R-C-R' cycle following Marx's model of economic capital, with the focus being on the transfer of social resources (R) rather than money (M). R represents an internal resource held by individuals, C the external resource or commodity they obtain from the network and the R' the internal resource of altered value. The possibilities of the model in assisting in the measurement of social capital specifically in assessing formal networks are explored.