Sometime between the masked shoeshine boys, the round women in rainbow cloth and high-riding bowler hats, the faded cafes with their green carpet and wood panelling, the waitresses bustling in starched uniforms, the raw concrete shafts of half-finished buildings, shoved up against the old belle epoque mansions, the tiny talisman jars, filled with candy and lucky charms, the stationery stores with their shelves of open old vellum notebooks, the fotocopias under ponchos on the street, el alto stadio san isobel de catholica santa cruz shouted from a thousand minivans barrelling down the streets climbing the hill, the sulfurous waft of the sewer curling up at the intersection, the dried llama foetuses on sale in the witches’ market in the shadow of the San Francisco church, the sharp white pyramid of Huayna Potosí, the four-mile-high mountain, visible down cobbled streets, the mother on the street making jellies in cups from an enormous silver bowl, her daughter twirling cream into the top, the men in five-buttoned beige suits and banana shirts, two-tone caramel nehru jackets, the guys in leather jackets with the girlfriends in aymara dress on their arms, flouncy diaphonous yellow and blue skirts, the homemade ice creams steaming in the afternoon rain, the unique smell of corn, the art deco santa cruz cinema lit purple as evening comes on, and the thousand thousand lights going on up and around the walls of the canyon the city sits in … I reminded myself not to exoticise the place as some form of, ohhhh I don’t know, Shangri-La of the magically real.

So I won’t. I came to see how the revolution in Bolivia was proceeding, how the plurinational state was exploring new ways of constituting a society, putting the resources in the hands of the people. I signed into the hotel. I turned on the TV. There was a rally in support of Hugo Chavez being broadcast at great and sombre length on BTV. Then “senors and senoras — Sean Penn!”. And there he was, Mr Madonna, in a Venezuelan-flag track suit, looking like, well, a giant banana.

“I’ll speak in English but I’ll make my remarks brief,” he said through a translator. Not brief enough for BTV which, with admirable common sense — few Bolivians speak English — swung away from his speech almost immediately, a small victory against star culture.

Penn wasn’t in La Paz for the rally, which was impromptu. Instead, he had come from Haiti to plead the case of Jacob Ostreicher, a New York global businessman who has been held here without trial for around 18 months, on vague accusations of money laundering and carpet bagging. The story’s been in the global news recently; it’s another one of those stories about left Latin America the global press loves to tell. In this case, le tout La Paz is talking about it too, as the prosecutor responsible for Ostreicher’s incarceration and that of half-a-dozen other people, have now been jailed for running a shakedown ring.

President Morales has said the rapid response of the government to corruption shows that the bad old days are over, rather than continuing. But it was only with Penn’s involvement that a real urgency was applied to the matter. And today, two judges, in Bolivia’s new and, erm, somewhat unseparation of powers, refused to release Ostreicher ahead of a new hearing a week ahead.

“He’s doing too much too fast, but not enough is actually happening. Still they are doing good things.”

Colour and corruption. As with Chavez’s Venezuela, there are only two ways of seeing Bolivia from afar, despite the fact the country has become a laboratory for new forms of social change, state power and society — more innovative and far-reaching than anywhere on the continent and in the world. Evo Morales and the Movement Towards Socialism, or MAS, came to power in 2005; a significant change for a country that had spent many decades in the stranglehold of a small Spanish-descended elite, with the indigenous Aymara and Quechua people — comprising some 70% of the population — excluded and oppressed.

The place has had its fair share of revolution, with an uprising in 1952 nationalising most of the country’s tin mines, but the elite has always managed to claw back power, with a series of coups lasting into the 1980s. The MAS was formed from indigenous activists — Morales was a coca grower and then a farmers’ union leader — and Marxist intellectuals such as former guerrilla Alvaro Linera. When they took power, it was widely forecast that they would take the country to disaster.

Since then resources, power supply and telecoms have been nationalised, but run efficiently, a trade deficit has become a trade surplus and the basic wage has gone from $US90 a month to $250, heading towards $300. There’s been the usual improvements in healthcare and literacy, though less striking than petrostate Venezuela, plus special funds to bring women into politics and a whole range of other reforms.

But the most striking process has been in the related areas of indigenous rights, environment and resources. It’s been the transformation of the nation from the idea — usually honoured in the breach — of generic citizens, to one of a plurality of nations, and the transformation of nature from that of externality and free good, to “Mother Earth”, an indispensible givenness, essential to life.

The notion of a “Mother Earth” is not unproblematic, but together with a plurinational tribunal, it fundamentally changes the relation between capital, society and the state. Indigenous people do not have to work through individual petitioners as a legal fiction to establish collective right; the fused doctrine assumes a collective social/natural entity — people living in country — assumed as prior to market transformations.

It’s a stunningly radical reconception — indeed, even Morales has run afoul of it, after he championed a road that would have carved through a whole series of territories — and a model for a post-capitalist idea of the state and society. It’s also a model for indigenous campaigns elsewhere, and it’s little surprising Australian indigenous activists haven’t made La Paz a destination, or Bolivia’s new system a high-profile model. In 2013, a fuller version of communitarianis comes on line. The MAS is not without a theatrical touch — Coca-Cola is being thrown out of the country on December 21, to coincide with the Mayan apocalypse date.

Whether the MAS can continue the march to the next election in 2014 and beyond remains to be seen. The few folks with enough English to vox-pop were all of one opinion. “He’s doing too much too fast, but not enough is actually happening,” said Georgiana, who runs a souvenir stall (fam, prepare yourself for an Xmas alpaca onslaught). “Still they are doing good things.” Hector, a neat-suited man, eating sachertorte in the old world elegance of the cinema restaurant, agreed there are too many new laws, but was less charitable. “They’re clowns. We always get clowns,” he shrugged.

He was a gentle man, but he was a voice of the old world. And the new world was all around him, the slogans painted on the expressway, the clothes, the people, living in a way that, though poor, is not marginal. The idea of an indigenous republic suddenly made sense, where the exotic becomes the real, and for once you feel yourself out of the theme park and amidst the real business of life.