Doctrine Of The Two Kingdoms
Martin Luther's doctrine of the two kingdoms (or two reigns) of God teaches that God is the ruler of the whole world and that he rules in two ways.
He rules the worldly or left-hand kingdom through secular (and, though this point is often misunderstood, also churchly) government, by means of law (i.e., the sword or compulsion) and in the heavenly or righthand kingdom (his spiritual kingdom, that is, Christians insofar as they are a new creation who spontaneously and voluntarily obey) through the gospel or grace.
The two kingdoms doctrine is simply another form of the distinctive Lutheran teaching of Law and Gospel. The official book that defines Lutheranism called the "Book of Concord" compiled in 1580 references a sermon by Martin Luther on this from 1528 preached on the 9th Sunday after Trinity in Marburg, that is about the Two Kingdoms or Two Kinds of Righteousness.
In that sermon he states that the wordly (left hand) Kingdom includes everything we can see and do in our bodies. This fully and especially includes whatever is done in the church. This is taught so that it is clear that in the Heavenly (right hand) Kingdom, the only thing that is included there is alone faith in Christ. "Christ alone" and "faith alone" are Lutheran slogans that are reflected in this way.
The biblical basis for this doctrine, as with all Law and Gospel modalities is the distinction St Paul makes in Romans 8 between "flesh/body" versus "spirit/Spirit". Martin Luther's breakthrough moment was his break with the traditional scholastic understanding of this passage. The Scholastics understood flesh vs spirit to be the movement from vice to virtue, from the profane/secular/civil to the sacred/churchly.
Luther saw this contrast instead to be a movement from true virtue, which especially included the sacred and churchly and any righteousness we can do or that is visible, to alone the invisible righteousness of faith in Christ, which in the sermon referenced here he says is "meaningless on earth except to God and a troubled conscience."
Read more about Doctrine Of The Two Kingdoms: On Secular Authority, Response and Influence, In Roman Catholicism
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