For around 15 years Latin America has been undergoing an unprecedented conjunction of political and economic change, from authoritarianism to democracy and from a state-centred matrix of economic development towards free-market economies. This article takes up the theme of the links between politics and economic change in contemporary Latin America. More specifically, it examines the relation between ‘old politics’ and ‘new economics’. It has two main purposes: The first is to re-examine some of modernisation theory's assumptions about the relations between political and economic modernisation. The second, more specific to the Latin American debate, is to question some of the dominant views about the nature of democracy in the region, particularly Guillermo O'Donnell's influential ‘delegative democracy’ model.