EUSTACE DAVIE: Less Marx, more Milei in SA

Argentinian President Javier Milei startled the world with a single word: “Afuera!” (out). With that, he began dismantling Argentina’s broken socialist system.

After decades of decline, Argentina had become a textbook case of what happens when a socialist government pretends it can plan, regulate and spend its way to prosperity. Milei has been caricatured as a madman. In truth, his programme is built on a serious intellectual foundation: the Austrian economics of Ludwig von Mises and Friedrich Hayek. 

Von Mises demonstrated that socialism could not work because it abolished economic calculation: without private ownership and market prices there is no rational way to allocate resources. Hayek showed that no central planner could possibly overcome the “knowledge problem” — the fact that knowledge is dispersed among millions of people and transmitted only through prices. 

Austrian economics is grounded in the fundamental principle that only individuals act. Each person seeks to improve their condition, using available means to achieve a chosen end, according to their own subjective assessment of what is important to them. When property is secure, the rule of law is sacrosanct and exchange is free of government interference, the innumerable choices of individuals interlock into a spontaneous order.

Undistorted prices convey knowledge, co-ordinate plans and enable rational calculation. Only through this spontaneous order — liberated from distortive state command — can prosperity extend to all. State interference cannot substitute for it. It can only distort prices, disrupt co-operation and reduce peace and prosperity. The result of intervention is not order but chaos: shortages, waste and poverty.

Milei’s reforms take hold

Milei’s programme is delivering results. Within his first year he abolished redundant ministries, reduced state spending by almost a third and achieved a primary fiscal surplus not seen since 2011. Inflation has been slashed 87%, down from above 200% per year to a projected 28.6% by year-end, with monthly rates at a two-year low. The peso has steadied, real wages are recovering and household incomes are rising.

—  Argentina shows that economic decline is neither inevitable nor irreversible. Milei’s reforms demonstrate in practice that Austrian economics works

The economy is beginning to grow again. GDP is expected to increase by 5.5% in 2025, with some months already recording year-on-year gains close to 6%. After a brief transitional increase, poverty has fallen back to about 38% and, according to the World Bank, could fall to near 12% by the end of this year if current policies are sustained. 

Barriers that had paralysed the economy have been removed: exchange controls lifted, price ceilings abolished and the peso freed. Investment plans are being revived and businesses are once again guided by prices that reflect reality rather than political guesswork. Growth follows when entrepreneurs can trust prices to guide their decisions, regain confidence and direct their energy into productive business.

A stark contrast: South Africa’s decline

These results are something South Africans can, sadly, only dream of. SA is living proof that Marxist doctrine destroys prosperity. After three decades of intervention, the economy has stagnated, unemployment is entrenched at world-record levels, and living standards are falling. Wealth is treated as something to be redistributed by politicians rather than created through trade and enterprise.

Property rights are undermined by expropriation threats, mining is paralysed by ministerial discretion, and exchange controls keep savings captive. State enterprises devour billions while services fail. Labour law, bargaining councils and union power exclude poor people from work, while race laws corrode trust, drive skills abroad and deter the very investment that would have created jobs. 

Lessons from Buenos Aires for Pretoria

Argentina shows that economic decline is neither inevitable nor irreversible. Milei’s reforms demonstrate in practice that Austrian economics works: when the government steps back, money is sound and property secure, order emerges and growth resumes.

SA could follow the same path. Certainty in property must be restored, with title deeds issued to property owners and expropriation threats abolished. The Reserve Bank must be barred from inflating the currency to fund deficits. Reckless spending must be replaced by fiscal discipline, with unnecessary ministries and agencies closed.

The state’s loss-making enterprises should be privatised, stripped of their role as instruments of political patronage. Race-based quotas and laws must go. Subsidies and price controls must be dismantled, and labour markets freed from union control so that entrepreneurs can hire and invest without hindrance. 

These are not minor reforms, but a clean break with the Marxist interventionism that has drained vitality from SA. They would restore the rule of law, bind government to impartial rules, and return prosperity to its true foundation — voluntary co-operation among free people.

What is required is the same resolve Argentina has shown, the willingness to dismantle a failing system, and to say, with quiet certainty, Afuera! 

• Davie is president of the Free Market Foundation and author of “Jobs for the Jobless” and “Unchain the Child”.