Rev. Matthew Harrison, the president of the Lutheran Church Missouri Synod, discusses a letter President James Madison sent to a Lutheran pastor in 1821 upon reading one of his sermons:
It is a pleasing and persuasive example of pious zeal, united with pure benevolence and of a cordial attachment to a particular creed, untinctured with sectarian illiberality. It illustrates the excellence of a system which, by a due distinction, to which the genius and courage of Luther led the way, between what is due to Caesar and what is due God, best promotes the discharge of both obligations. The experience of the United States is a happy disproof of the error so long rooted in the unenlightened minds of well-meaning Christians, as well as in the corrupt hearts of persecuting usurpers, that without a legal incorporation of religious and civil polity, neither could be supported. A mutual independence is found most friendly to practical Religion, to social harmony, and to political prosperity.
President Harrison then goes on to give a very clear and perceptive explanation of the Doctrine of the Two Kingdoms, which Madison was picking up on, which gives an alternative both to the view that the church should try to rule the world and the view that Christians should withdraw from that world.
From Rev. Matthew Harrison, Genius and Courage | LCMS News & Information, in The Lutheran Witness:
What is the “due distinction” “between what is due to Caesar and what is due to God”? This is a reference to Luther’s two kingdoms doctrine. Historic, pre-Reformation Catholicism perpetuated the myth of the “Donation of Constantine”–that the Emperor Constantine (ca. A.D. 317) had given authority to the papacy to rule the Roman Empire, and that the Church was supposedly given the divine right and authority to govern both itself and the world. This was used to justify all sorts of mischief through the centuries following, where the Church meddled in governmental affairs and vice versa.
A second approach emerged at the time of the Reformation among the so-called radical reformers. They asserted that society should be ruled only by the Bible. This led to either a radical withdrawal from participation in civil society (e.g., the Amish), or to the view that a “Christian government” is needed to institute biblical principles upon society (e.g., the Puritans and their legacy). The views of both the Roman Catholic as well as the radical reformers resulted in a “mixing the kingdoms.”
Luther’s view, however, is unique. In view of texts like “The truth shall make you free” (John 8:32) and “Render unto Caesar what is Caesar’s and unto God what is God’s” (Matt. 22:21), Luther asserted that the conscience, the religious convictions of the individual Christian, belong to God and not the government. The Bible teaches two distinct realms.
The “right hand” realm or kingdom is that of the Church. In this kingdom there is to be no coercion, no force, no corporal punishment. It is a kingdom ruled solely by the Word of God in service to the Gospel of Christ. “My kingdom is not of this world” (John 18:36). It is a kingdom whose glory is hidden in weakness, small numbers, persecution, reviling, etc. It makes no sense to reason whatsoever–things like “the resurrection of the body,” “baptismal regeneration,” “the body and blood of Christ,” in the Lord’s Supper, etc.
The “left hand” kingdom is temporal government. This kingdom, too, is established by God (Rom. 13:1–7). It flows form the Fourth Commandment (“Honor thy father and mother”). This kingdom operates not by revelation, but by reason or natural law. The Gentiles, “when they do the things of the law, demonstrate that the law is written on their hearts” (Rom. 2:14) The governing authorities “do not bear the sword in vain” (Rom. 13:4). Temporal government is established by God for maintaining good order, peace, to thwart evil (by just war and other means), etc. When government forbids the Gospel, however, or commands us to act against a Christian conscience informed by the inerrant Word of God, then “we must obey God rather than men” (Acts 5:29).