I'm sure Putnam is right that there's been a decline in certain kinds of organizations like bowling leagues. But people participate in communities in other ways.
But we don't have an example of a democratic society existing in a socialist economy - which is the only real alternative to capitalism in the modern world.
I think what I and most other sociologists of religion wrote in the 1960s about secularization was a mistake. Our underlying argument was that secularization and modernity go hand in hand. With more modernization comes more secularization.