Social exclusion in the European policy and social research agenda is understood as both a process and an effect of the failure of key social institutions, in particular labour markets, to secure appropriate conditions to fulfil their integrative potential. This conception of exclusion is, as Room (1995) has pointed out, derived from the French intellectual tradition, in particular from the functionalist social theory of Durkheim. Such theory is premised upon a particular understanding of 'the social' and the relationships between the institutions which comprise it. Within such a framework, social exclusion is posited as a dysfunction in a basically sound structure which can be repaired by some adjustments. Yet, there are alternative understandings of exclusion which pose a fundamental challenge to this functionalist conception, and which direct us to a very different research agenda. In this paper we discuss some of the problems with the neofunctionalist position and outline alternative ways of conceptualising social exclusion. In particular, we argue that exclusion, rather than being an effect of the failure of key social institutions, is built into such institutions. This can lead to a potentially more radical understanding of the role of social research and social policy in Europe.