Acton Commentary

The Economics of Liberation Theology


None of the prominent liberation theologians influential in Latin America had significant training in or exposure to the discipline of economics. This was odd given that their concern for the material well-being demanded at least some attempt to provide an economic explanation of underdevelopment and mass poverty. Instead of engaging in such economic reflection, many liberation theologians effectively married their theology to various renderings of what was then the fashionable dependency theory, which holds that that resources flow from a "periphery" of poor and underdeveloped states to a "core" of wealthy states, enriching the latter at the expense of the former.

In his 1991 book Will It Liberate?: Questions About Liberation Theology, theologian and philosopher Michael Novak devoted an entire chapter to painstakingly demonstrating the ties between dependency and liberationist thinking. One of the quotes he uses as evidence seems proof enough of the connection. According to the Brazilian theologian Hugo Assmann, liberation theology would make little sense “apart from the factual judgment that the poor of Latin America suffer not from simple poverty but from oppressive structures, linked to external forces of domination.”

Assmann and his peers were persuaded by Argentine economist Raul Prebisch’s insight that was central to dependency theory: that peripheral economies were at a disadvantage vis-à-vis the developed, industrialized center due to the unfavorable terms of international trade. On this basis, dependency theory maintained that governments should erect barriers to trade. These would reduce reliance on agricultural products and exports and lead to the emergence of a domestic industrial sector in underdeveloped countries. Other dependency theorists emphasized that the region’s status as dependent economies had even deeper structural and social causes. Therefore social transformations had to accompany state intervention and direction of markets. Here we should note that this sociological language was also more familiar to many Latin American priests and theologians than the more abstract jargon of formal economics, given that most such theologians were educated within a continental European university framework which often gave precedence to anthropological and sociological concerns.

Leading proponents of liberation theology were not simply looking to curb external domination or implement piecemeal types of reforms. They called for a more-or-less socialist revolution.  Indeed, as Novak demonstrates, theirs was not a lukewarm socialism or mild social democracy capable of coexisting with private property, markets, and democratic institutions. It was, to use Gutiérrez’s language, the radical doing-away with “private appropriation of the wealth created by human toil” and the abolition of the “culture of the oppressors.”

How did dependency theory with its socialist-like proposals to solve poverty and the Marxist influence on liberation theology fuse together? One often hears disclaimers to the fact that not all dependency and liberationist writings were Marxist. This is of course true. Novak himself argued that “liberation theology forms a tapestry much broader than its Marxist part and is woven of many colors.” It is worth stating that the work of carefully distinguishing between the various theoretical foundations suited to liberation theology, as Novak and Joseph Cardinal Ratzinger (later Pope Benedict XVI) did at the time, is not the same as trivializing the broader Marxist influences. There are some subtle differences between the Ratzinger-Novak caveat and other claims concerning the impact of Marxism. Some of these other assertions were that (1) classic Marxism had been revised or distilled by the seventies, (2) Marxism as an academic tool did not contradict Catholic dogma and doctrines, (3) the first Christian communities were proto-marxian, and (4) a “Christian socialism” that eschewed Marxist atheism and materialism was possible. In a scholarly analysis published in 1988, H. Mark Roelofs maintained that the differences between liberation theology and old-style Marxism could be explained in the following manner:

Liberation theology is not a Marxism in Christian disguise. It is the recovery of a biblical radicalism that has been harbored in the Judeo-Christian tradition virtually from its founding … Liberation theologians turn to modern Marxism chiefly to gain a comprehensive understanding of contemporary class conflict and poverty.

In the face of such obvious equivocation – most notably, concerning whether it was possible to separate Marxist analysis from Marxism’s operating assumptions of atheism and materialism – Novak complained: “What no one clarifies is what is meant by ‘Marxist analysis.’” Novak went on to list seven elements in liberation theology that were present in much of the literature and decidedly Marxist in tone and content. These were (1) the effort of liberation theology seeks to create a new man and a new earth, (2) the espousal of a utopian sensibility, (3) the benign view of the state, (4) the failure to say anything about how wealth is created, (5) the advocacy of the abolition of private property, (6) the treatment of class struggle as a fact, and (7) the denouncement of capitalism. In Novak’s opinion, this worldview was not only theologically and morally wrong. It would result in Latin America paying a high economic and political price that would hurt the poor.

A ‘Liberal’ and Catholic Proposal

When he looked ahead to how Latin America ought to be transformed, Novak was categorical: “Liberation theology says that Latin America is capitalist and needs a socialist revolution. Latin America does need a revolution. But its present system is mercantilist and quasi-feudal, not capitalist, and the revolution it needs is both liberal and Catholic.”

The platform that Novak recommended for Latin America – democratic capitalism – was thoroughly described in his 1982 book The Spirit of Democratic Capitalism. Novak went to significant lengths to explain that free markets, understood as spontaneous social institutions, were grounded on a substantive moral substructure. Humanity, he argued, could best achieve prosperity in an open environment, whereby the creative energies of millions of individuals were released from the base. According to Novak, markets also induce free and responsible participants to behave habitually with integrity and reliability; economic and social cooperation, for example, is preconditioned on the trust we can place in each other.

This line of thought was deployed by Novak for the intended audiences of Will It Liberate? Novak stressed, for example, that the market liberates us from poverty while democracy liberates us from tyranny and torture. In the format of a dialogue that he playfully calls a “catechism,” Novak established some of the liberation theologians’ biases against – and ignorance of – capitalism.

Capitalism, Novak insisted, is not morally bankrupt nor has it been improved on or superseded by the welfare state. Latin America, Novak went on to state, was still living in a “pre-capitalist, traditional system.” This meant that the market economy had not even been properly tested throughout the region. One cannot therefore say that capitalism has somehow failed. There is no reason, Novak added, why free markets should work only “up North.” Free markets did not benefit the rich to the detriment of the poor. Indeed, undue privileges now afforded some economic players in Latin America would not exist in a truly free market, and corruption would diminish.

The toughest objection of the liberation theologians addressed by Novak was what they perceived to be the Catholic Church’s alleged condemnation of capitalism. Was it not the case, the liberation theologians maintained, that economic liberalism led to moral permissiveness by making “money and wealth the measure of all things” and imposing an unyielding economic logic on life?

To such claims, Novak responded, “free markets are no more permissive than God himself, who sends his rain on the just and unjust alike.” The decline in moral standards and religiosity in the West, Novak stated, is not causally related to free markets. Indeed, he added, “the very foundations of the liberal society crack” when people abandon their faith in principles that antecede “any state or social order” and that “reside in man’s spiritual nature.”

This article is excerpted and adapted from "Michael Novak, Freedom, and Liberation Theology" by Carroll Ríos de Rodríguez in Theologian & Philosopher of Liberty – Essays of Evaluation & Criticism in Honor of Michael Novak, edited by Samuel Gregg (Acton Institute, 2014).