In this article, we discuss the modernization hypothesis in consideration of the causes of democratization related to economic development. The modernization hypothesis was formulated in the mid-twentieth century in the midst of specific economic and socio-political conditions. Since then, both societies and representations of their developments have changed. Current research disregards these transformations; therefore, with this work, we aim to fill the gap. We make clear how the neo-liberal turn influenced representations of economic development and democracy. Realization of the neo-liberal economic policy resulted in important social changes, particularly the rise of inequality and the wave of populism that endangers liberal democracy. At the same time, the modernization hypothesis is based on presumptions that economic development leads to income equalization and the creation of the broad middle class. Our analysis reveals that empirical surveys tend to confirm the relationship between economic development and democracy. However, economic growth does not necessarily entail more equal income distribution. The rise of populism indirectly confirms the rightness of the modernization hypothesis and suggests an important role for class dynamics. Democratization necessitates not only the establishment of liberal institutions but also the transformation of the social structure via convergence of incomes.