Liberation Theology was a hot issue 25 years ago. It was populized by Peruvian priest, Gustavo Gutiérrez, in his book - Theology of Liberation: History, Politics and Salvation - it attempts to synthesize the Gospel in feeding the hungry, oppressed, and tying it into political activities of Catholics.
According to Gustavo Gutiérrez, true "liberation: has three main dimensions:
In Latin America at the time it was developed, there were struggles with Marxists and governments sponsored by USSR. During these struggles, the political ideology became the focus. Liberation theology went wrong when it tried to affect the kingdom of God on earth. The essence of the Gospel, in their view, didn't have to do with heaven or hell, it's with the oppressed. The Catholic Church said it's not either/or, rich or poor, it's both. It ceased to be a theology and became an ideology.
Pope John Paul II largely put an end to the Church's support of liberation theology by his statement in January 1979, on a visit to Mexico, that "this conception of Christ as a political figure, a revolutionary, as the subversive of Nazareth, does not tally with the Church's teachings." However, it retains a high degree of support, especially among the laity and individual priests. And indeed John Paul himself acknowledged that Marxism contained within it a "kernel of truth" about the exploitative nature of capitalism.
In Cardinal Ratzinger's book (now Pope Benedict XVI) - Salt of the Earth - he gives an outline of the problems with liberation theology.
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