The needs to find ways of lifting people out of poverty and to transform the existing patterns of inequality in South Africa are high on the country’s development agenda. Much hope is often vested in education as an opportunity for children from poor households to overcome the disadvantage of their background and escape poverty. The logic of this is often conceived of in terms of the human capital model, according to which education improves an individual’s productivity, which in turn is rewarded on the labour market by higher earnings. However, there is a circularity in the relationship between socio-economic status (SES) and education, in that it is well known that a student’s SES has an important influence their educational achievement. Drawing on data from the recent Progress in International Reading Literacy Study (PIRLS 2006), this paper investigates the extent to which SES affects educational achievement in the case of South Africa, and moves on to consider the implications of this for the ability of the education system to be an institution that transforms existing patterns of inequality rather than reproducing such patterns.