I'll be the first to admit that I am not a theologian, so my understanding may be deficient in that regard. I am merely a Catholic who went to a Jesuit high school and who tries to read about religion. Given that Benedict XVI's involvement in opposition to liberation theology has come up a lot, I think it would be helpful if I tried to share what I know about liberation theology. I would be happy if anyone can correct or add to what I have written. If it saves you time from reading, my general outlook is that I am sympathetic toward the concerns of liberation theology, but concerned about its practice in the past.
Simply put, there's liberation theology, and then there's liberation theology. One is a liberation theology as it has been done in the past, the other is a liberation theology that could be.
One version of liberation theology is that espoused by the Maryknoll priest Miguel D'Escoto and the brothers Ernesto and Fernando Cardenal, who served in the Cabinet of the Sandinista government in Nicaragua. It is the same liberation theology espoused by priests who served as chaplains for Marxist guerillas in Honduras and El Salvador. Some went so far as to bear arms. (This is the thing that, frankly, makes me feel horrified at the way liberation theology was practiced in Latin America, though not at the theology itself.) It is a dichotomous mindset that capitalism is flawed and that the only alternative is communism. Accepting Marxism, liberation theologists endorsed struggle and revolution, armed if necessary, as the path toward freeing the poor. The name of God was invoked to support violence, although war is rarely a moral means to remove an oppressive regime.
This liberation theology calls for liberation from political oppression, not from spiritual fetters and sin. Ironically, although it criticizes materialistic capitalism, it is itself materialistic, being concerned more with economics here on Earth rather than on the traditional Catholic concern of eternal life and the next world. Liberation theology became an explicitly political and religious movement.
I was taught that the Jews expected a Messiah who would be a military and political leader, throwing off Roman rule. In the Christian tradition, the Messiah was a non-political figure more concerned with spiritual things, telling people to render unto Caesar what is Caesar's. Liberation theology returned to a political conception of the Messiah. (Yet liberation theology without theology is nothing at all.)
Although originally conceived as a commitment toward the concerns of the poor, the preferential option for the poor in practice became a preferential option for the proletariat. Rather than criticizing the spiritual dangers that rich men often fall victim to, instead this new theology asserted that because Christ was poor and often interacted with the poor, that there was something inherently moral about being poor (or, rather, being proletarian). Personally, I find the reasoning rather similar to those who argue that because Christ was male, that there is something inherently superior about being masculine.
If the poor as "the people of God" were to be favored, then the source of theology became "the people." Liberation theology became anti-hierarchical. Just as Andrew Jackson sneered at the Supreme Court, telling it that it had "made its decision, now let them enforce it," so too did priests ignore Vatican orders to desist from political activity, despite in some cases a personal vow of loyalty to the pope. (Robert Drinan, by comparison, obeyed the directive that Catholic priests should not hold political office and resigned from Congress.) This version of liberation theology seemingly identified the bishops as bourgeoisie and promoted struggle against the Vatican. (The United States was also singled out as a villain.) Liberation theology, as practiced, promoted class warfare and struggle between the people of God and, by default, the people not of God.
In all, I think that the history of liberation theology shows the dangers of mixing faith and politics directly. I think that a lot of Catholics who meant well on issues of poverty got caught up in a movement that ended up with them justifying a regime that committed human rights abuses. For example, like Abu Ghraib, the Sandinistas used torture on political prisoners. I find it similar to many well-meaning conservative Christian Americans who get caught up in certain issues so that they turn a blind eye to the other flaws of the Republican Party. Just as a supposedly pro-life Republican Party has done little to actually stop abortions, so too did liberation theology fail to actually mitigate poverty in Latin America. (Although the U.S. embargo and support of the Contras did much to damage the Nicaraguan economy, I somehow doubt the Sandinistas were hampered geniuses who otherwise would have brought great prosperity to the masses.)
Still, there is much to be said for the basics of a liberation theology. The "preferential option for the poor" is an interesting tenet. Catholicism, unlike Protestantism, stresses good works such as feeding the hungry and clothing the naked in addition to faith. This option is a commitment to treat the poor as significant because they possess the basic human dignity that all share. Of course, part of this concern is that material poverty prevents people from concentrating on God and salvation. I personally interpret the "preferential option for the poor" as a manifestation of the belief that it is people themselves who are important, that there exist basic human rights that all possess and none can forfeit. This influences my political stance that human rights must take precedence over property rights. The Gospel says, "whatsoever you do to the least of My people, that you do unto Me." This is the spirit that inspires the option for the poor, answering in the affirmative to Cain's question, "Am I my brother's keeper?"
Liberation theology may allow agitation for political change to be a form of good works. Certainly, not all change is good and some changes have unforeseen consequences, yet there is an awareness that how we structure society and how we vote has moral implications. I would not go so far as to say one must absolutely vote in this or that fashion, but I would say that faith informs us as to what issues we must consider and it is up to our own moral compasses to weigh these issues according to their proportion and up to our own initiative to gather information that will help us decide. Liberation theology calls on us to be aware of politics and the need for social action. However, it should not go so far as to say we must vote for a specific candidate.
Liberation theology was a Third World response to poverty. It points the way to globalization and imbalances between different regions of the world as an area of concern. A faith-based approach to economics must be concerned for the poor in other parts of the world, not just our own. Too often, anti-globalization forces think only of protecting domestic jobs rather than creating a just international economic system that is fair to all. A preferential option for the poor must not devolve into an option for the American poor.
So, to sum up, liberation theology has a lot going for it. However, it carries with it a lot of historical baggage because, like the Bush administration's forged documents, it has been used to justify some senseless and unnecessary violence. It might almost be for the best if much of liberation theology was taken and reworked under a different name, combined with a preference for non-violent means, for what good is it to win a superficial economic liberation by giving in to the spirit of war and losing one's soul? Liberation theology is both promising and dangerous, but it cannot be ignored. (5:52 PM)
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