R&L: What impact has the Revolution of 1989 had on liberation theologians?

Novak: In a debate two months ago, I heard Hugo Assman say that the upheaval in Eastern Europe prompted him to rethink the notion of “basic needs.” He used to say that there were some things that he did not admire in Eastern European socialism, but at least those countries met the basic needs of their people. He wished that all countries in Latin America could do at least as well. But the revolt of Eastern Europe showed him that a strategy of “basic needs” is not enough.

Prisons fulfill the basic needs of prisoners; free peoples want more than that. They want real freedom, not just the satisfaction of animal needs. So, the revolt against socialism in Eastern Europe is another nail in the coffin of the idea of socialism. At the very least, liberation theologians in Latin America will have to specify more clearly what they mean by socialism. Perhaps they will even drop the word. In that case, they will have to state what they mean by “liberation.”

R&L: But don’t they still hate capitalism?

Novak: In Latin America, when they say “capitalism,” they mean the existing system they see all around them. They don’t realize that is not capitalism, but the inheritance of the mercantilism of the Spanish and Portuguese crowns. It is a state-directed economy, in which small privileged groups enjoy the favor of the state without facing petition. Privileged elites have a stranglehold on the nation. A genuinely capitalist system would open up the economy, introduce petition, and make it possible for those previously excluded to rise as far as their talents take them. Latin America desperately needs a capitalist revolution, from the bottom up. It needs what Guy Sorman calls “barefoot capitalism,” and what others call “popular capitalism.” It needs virtually universal private property ownership, universal access to credit, and the cheap and easy incorporation of small businesses. Latin America needs to empower the poor through capitalism.

R&L: Why don’t liberation theologians see this?

Novak: Like most intellectuals, especially in Catholic countries, they are biased against it. They share two sets of biases: the anti-capitalist biases of the traditional aristocratic order and the anti-capitalist biases of the socialists. Many of their objections to capitalism are artistic, literary, cultural, and quite traditional. These objections may actually linger longer than objections rooted in the socialist vision, since the socialist vision has been so thoroughly discredited.

R&L: What do you mean “thoroughly discredited?”

Novak: Oh, some liberation theologians will still speak about democratic socialism or social democracy. Some will point to Sweden or West Germany, or even Canada. But that is hardly “socialism”; those are really variants of capitalism–private property, markets, profit, and enterprise.

Since Latin culture is quite different from Anglo-American culture, it would be reasonable to suppose that a new and humane form of Latin American capitalism will have a strong ponent, more like the social democracies of Southern Europe or Canada than the United States. That’s for them to decide. Every democratic capitalist experiment is different from every other. Each new version can be unique.

R&L: You don’t seem to see much difference between social democracy and democratic capitalism?

Novak: That’s right.

R&L: Can you explain that?

Novak: The crucial thing is to develop a social system that liberates all the people, including the poor, or at least all who are able-bodied and of working age. For the elderly, the very young, the sick, and the disabled, there will always have to be something like a welfare system. But for the able-bodied, there must be jobs and the kind of new invention that creates new industries and new opportunities for a dynamic and growing population.

This makes markets necessary to send back clear economic signals about what people want and need. Without market information, an economy is working in the dark. It also means private property, so that people feel free to employ and to risk their own possessions in line with their own imagination. It means universal access to credit, since venture capital is the mother’s milk of invention. It means incentives, and the ability to accept responsibility for the es of one’s action, either profits or losses. In short, most “social democracies” would soon self-destruct if they were not built around a dynamic capitalist economy.

True, social democracies tend to be more concerned with welfare, security, and equality. whereas societies tilted toward the dynamism of the private sector tend to emphasize risk, opportunity, adventure, innovation. Social democracies tend to have a slightly larger state sector; democratic capitalist societies tend to have a freer private sector. Between the two systems, there is tremendous overlap.

In the long run, I think the democratic capitalist societies have a better chance to survive because of their greater liberty and greater capacity for innovation and change. They are more likely to have growing populations. The social democracies tend to stagnate, since their spiritual ideal is security.

R&L: Is it ethnocentric to hold that Latin Americans want a democratic system like that of North America?

Novak: It need not be like North America. They could imitate Japan, or Australia, or Spain. Each democratic capitalist system is unique. Two years ago, Italy for the first time surpassed Great Britain on indices of entrepreneurship and small business. Italy has a tradition of artists, craftsmen, and free spirits. Democratic capitalism suits its disposition well. But Italy also has a strong familial and social tradition.

The main point is that people everywhere, universally, are capable of reflection and choice. Made in the image of their Creator, they have a vocation to be creative in their own lives. It is not ethnocentric–it is universalist–to hope that all peoples e to enjoy free systems that allow them to multiply their acts of reflection, choice, and creativity, through the institutions in which they live. Differences of culture and tradition are precious. It is one advantage of democratic and capitalist systems that they allow far more room for freedom in the cultural sphere than socialist societies do, and far more opportunity than traditionalist societies do. That is why they have universal appeal. Even the students in Shanghai gave their Statue of Liberty Western features–to show both the origin of liberty and its universal applicability.