More than 26.5 million South Africans receive social grants, a pillar of post-apartheid redress. For those households, and for the millions more living with mass unemployment and deeply racialised inequality, debates about economic reform are never abstract; they reach into daily survival. A new analysis of Argentina’s radical experiment under President Javier Milei speaks directly to that audience, and its conclusion is careful: Argentina offers lessons, but not a blueprint.
The study, published in the South African Journal of International Affairs in 2026 and available open access, draws on research in comparative political economy and strategy across Africa, Asia and Latin America. Its premise is that reform is usually judged by its numbers, inflation, deficits and growth, while far less attention goes to the beliefs and habits that decide whether people will accept those numbers, and for how long. Argentina under Milei, it argues, offers an unusually clear view of that psychology at work.
Milei took office in December 2023 promising libertarian policies, a doctrine holding that individual freedom and free markets work best when government is kept to a minimal role, largely limited to protecting property, contracts, personal safety and free market forces. He was true to his word. His measures included spending cuts, the removal of a raft of business rules and restrictions, making the peso officially worth less against the dollar, and stopping the central bank from printing new money to cover the government’s budget gaps. Together these steps were meant to end the overspending and money-printing that fuelled runaway inflation, even though they caused short-term hardship for many households.
The early results were striking: Argentina’s first fiscal surplus in over a decade, and monthly inflation brought down. The costs fell on ordinary people, though, in recession, higher poverty in the early period, and falling real wages and pensions. Later gains included a partial economic rebound and an easing of currency controls. Yet by August 2026, more Argentines disapproved of the Milei government than approved, even as inflation fell sharply and the budget returned to surplus. Explaining that gap is the heart of the analysis.
The concept at the centre of the answer is state dependency: a society in which large numbers of people organise their lives around income, jobs and support from the state, which creates powerful resistance to cuts. Argentina built this over decades. In 1943, Colonel Juan Perón introduced social measures for the country’s growing class of urban industrial workers, and the Peronism that followed fused union power, protectionism and redistribution. After the economic collapse of 2001 pushed more than half the population into poverty, subsidies, price controls and welfare became central to everyday survival. By the end of 2023, roughly 40% of households received a state transfer and inflation exceeded 200%.
Dependence, however, did not produce trust. Argentina has defaulted on or restructured its debts at least nine times, and repeated currency collapses wiped out savings. People came to feel losses sharply, to favour spending today over trusting tomorrow, and to meet every stabilisation plan with suspicion; hoarding dollars and working informally were rational responses. Milei set out to redirect these defensive habits. His campaign against la casta, the political class he cast as living off “productive Argentines”, changed the yardstick by which people judged reform. Cuts were presented as a moral clean-up targeting insiders and middlemen, even as retrenchment imposed costs on vulnerable households, which is why his libertarianism took the form of a crusade rather than technocratic market reform.
The reforms came in phases. A front-loaded fiscal shock, in which a government makes its biggest and most painful budget changes at the very start of a reform rather than spreading them out, turned a deficit into a small primary surplus within a year and cut ministries from 18 to eight. A dedicated deregulation ministry scrapped rent controls and hundreds of rules, and ending central bank financing of the Treasury worked as a shock to expectations. Annual inflation has since dropped from a peak of nearly 300% when Milei was voted in to around 33% in 2025. Greater predictability reduces panic buying and dollar hoarding, making longer-term planning and formal saving more attractive for households.
It was never pure libertarianism. Free marketeering has not been implemented in local and international trade practices, and universal child allowances and basic pensions survived. Welfare was restructured so payments went directly to recipients rather than through political brokers, and rule by decree gave way to deals with Congress. The result is libertarianism with Argentine characteristics.
The gains are real but provisional. A post-drought harvest helped, and unusually high earlier inflation flattered annual comparisons. The social costs were substantial: real public spending fell by roughly 30%, energy and transport subsidies were slashed, and tens of thousands of public jobs were eliminated. Industrial policy was largely abandoned, and deep cuts to science, education and social protection raise questions about the institutional capacity needed for lasting development.
The central question is whether an early shock can become lasting credibility. Reforms endure only if households, businesses and investors believe they will not be reversed. As the memory of crisis fades, Argentines judge the government against their wages, jobs and the prosperity they were promised, not against the crisis conditions of 2023, and surveys point to growing concern about wages and employment. Because Milei’s appeal rested on a moral break with a corrupt elite, corruption allegations reaching his own government strike at the story that made hardship bearable. Falling approval does not mean the experiment has failed; it underlines how hard it is to turn a mandate for disruption into lasting support.
For South Africa, the terrain differs fundamentally. The country’s defining trauma is not inflation, which its Reserve Bank has kept in check, but mass unemployment and deeply racialised inequality. South Africans expect the state to tackle these problems, not retreat from them. Coalition politics, strong unions, active courts, powerful big business and constitutionally protected socio-economic rights make shock therapy far harder, and cuts to social protection would be read through the lens of racial injustice. Where Milei treats the state as the constraint to be cut back, Operation Vulindlela, run by the South African Presidency and National Treasury since 2020, treats weak coordination in basic infrastructure as a problem to fix; credibility can be earned by demonstrating state capability, not only by shrinking the state.
The lessons travel even where the model does not. Credibility and expectations matter as much as policy design. Confronting patronage works when reform separates the intermediaries who exploit support from the vulnerable people who depend on it. Business and investors can sustain momentum when politics is fragile, and reform needs a story that citizens recognise. For South Africa, a libertarian route risks eroding the institutions on which inclusive growth depends; the more promising path is a hybrid, a capable developmental state that borrows Argentina’s lessons on credibility and patronage while strengthening the state.
Whether Milei’s experiment proves a turning point or a temporary rupture remains open. What it already shows is that reform depends less on ideological purity than on institutions, credibility and behavioural context. The analysis, “Argentina’s experiment in libertarianism and behavioural political economy: Lessons for South Africa”, appears in the South African Journal of International Affairs (2026) and is available open access. Annabel Dennison contributed to the article; she is a Master’s candidate in Economics and Psychology at Paris 1 Panthéon-Sorbonne and an intern with the Porter Institute’s Africa Hub at the Gordon Institute of Business Science in South Africa.