The entry into the world of the world of Marx's ideology, one which is, in certain respects, very similar to that of Christianity and the practices of the early Church but in others demonstrates a profoundly anti-christian lack of concern for the individual, is a challenging problem for Christians. We do not want others to think that when we are promoting moral society founded on compassion for the disadvantaged that we are promoting an agenda whose logical end, by virtue of the fact it places greater value on one group of people (be they workers or farmers or serfs or whatever group a particular adaptation of marxism adopts) over another, is Yezhovshchin and is thus incompatible with a faith which hangs on the fact that God became a human being and so human beings are themselves sacred. Without wanting to put words into Augustine's mouth, all he is in fact doing with his political beliefs is remaining faithful to the teachings of Christ; that he acknowles that he finds the psychological triggers of external beauty fit well into his spirituality and help him to pray seems to have little bearing on the matter. I am no theologian, but from my layman's perspective (in both senses of "lay"), a comparison of the aims of Liberation theology with the doctrine that Christ taught indicates to me that they fit quite snuggly.
The problem in the Liberation Theology that I have read, as I see it, is the language it employs. It is that of class struggle, a struggle which has no place in Catholicism which teaches that all people are equally children of God no matter what their class. The authors were writing for people in South America who had already come across socialist ideas and so were were speaking in terms appropriate to them. The world has moved on. Marxism is a spent force and an irrelevance to anyone's day to day life.
I see a genuine Liberation Theology at work in the Order of Malta but coming from the other end. Until very late in its history, the OM was comprised exclusively of nobility but the Order grew into a way that the Church could encourage the very wealthy to take on the responsibilities of that wealth in looking after the poor. No one was forced to do anything, but the presence of the Order made it much harder for the rich to ignore their obligations. It continues that work today. The OM group I work with is drawn from a very middle class background due to its links with a University limited in its ability to take people from other backgrounds by the failings of the secondary education system. This coterie of privilege works with the least privileged people in society to make their lives more comfortable and provide a bit of companionship to those who would otherwise be alone.
Politically, I (though not Cosmas) would support a more pragmatic approach than that and would vote for heavier taxes on people like me who have more money than I need, to be spent for the benefit of those who have less than they need in what is fundamentally a distributist model. I don't think that fulfilling responsibilities should be optional and I don't trust people to do so.
The pope has distanced himself from the views of Archbishop Müller who is a keen supporter of Liberation Theology, presumably to distance himself from any suggestion that he might support the marxist tendencies parts of the movement still hold dear.
This is where I think that Liberation Theology got somewhat out of hand. There is nothing marxist about the fundamentals of Liberation Theology, that was baggage it acquired later. A preferential option for the poor is one thing, the neglect of the wealthy is another. That I think the responsibilities of the wealthy should not be optional certainly does not mean that I think they should be impoverished in order to squeeze them through the eye of a needle. I believe in a right to property, but I also realise that I'm already in a position where I have more property than I need. Priests promise to live simply and everything that is required of a priest should be required of the laity. The requirements for a priest may be more specific (eg to pray the breviary rather than to pray daily or to live celibate chastity rather than the chastity which could be within the context of marriage), but they come from the requirements of us all. I think a refined Liberation Theology, stripped of its now irrelevant allusions to class war and embodying the theology of Rerum Novarum, Populorum Progressio, Laborem Exercens and the rest of the extensive corpus of social doctrine, has an enormous amount to give not only to the Church, but to the wider world. I think its potential to save souls is huge.
Above all, I think it's crucial that we stop thinking of it as "Catholic Social Teaching". In once sense of course, that's exactly what it is, but a better way of thinking of it would be as "Christian Doctrine", that is, the declarations of Christ applied to the modern world. They are teachings in the sense that we have to learn from them, but doctrine in that word's implication that we are bound by them. We have a very limited choice in whether to live by them since the consequences for not doing do are encapsulated in the infinity that is outside the circumference of the eye of needle. Liberation theology can fit within the space, but only if it sheds the camel's saddle bag of marxism.