This excerpt below comes from the lead article of LOGIA issue XXIII-4 by Carter Lindberg. He asks (and answers) some difficult questions about Luther's view of economics and welfare.
Luther on Wall Street and Welfare
—by Carter Lindberg
The juxtaposition of “Luther, Wall Street, and Welfare” may disturb American church-goers, who, to paraphrase the old cliché about the Church of England, may often be dubbed “the Republican Party at prayer.”
A strong case can be made for Lutheranism’s contribution to establishing a welfare state, but Lutheran theology and Lutheran churches often are ambivalent in their embrace of this kind of society.1
While European Lutherans have some sense of Luther’s vehement attack on capitalism and his contributions to the development of social welfare, American Lutherans generally remain unaware of these aspects of their tradition.
Mark Noll, an American Evangelical church historian, wonders why Luther’s influence “has not been forthcoming, or has been forthcoming only intermittently.”2 The mystery is perhaps illumined in light of the parallels between the Pelagianism of Luther’s medieval context and that of modern America. The fundamental orientation of both is a piety of achievement exemplified by the motif of ascent. In the medieval period the dominant image was the Ladder of Virtues by which one climbs toward heaven; in American culture it is the self-help industry, bootstrap mentality, and the corporate ladder by which one climbs to material success. In our context, Pelagianism is not just a theological heresy but a tool of economic oppression. Anyone who works hard will succeed; therefore the poor have not worked hard.3
Luther’s attack on the works-righteousness of the medieval ladder of virtues was equally an attack on the early profit economy. Both reveal the drive to secure one’s existence, and as such express the counterfeit gospel that a person’s worth depends upon achievement. To Luther, the good news is that human worth is independent of success whether measured in terms of good works or acquisition of the world. The capitalist drive to acquire the world is the same “coin” as salvation by works. By striving to acquire the world, trust is placed in self-achievement rather than God. Meanwhile the neighbor is neglected.