At the end of his book, Temporal Authority: To What Extent It Should be Obeyed, Martin Luther takes up the topic of restitution, which he defines as “the return of goods wrongly acquired.” In the interest of relevancy and hot takes, I am going to connect this to reparations, since the concepts overlap and Luther is talking about restoring lost material wealth. Luther explains that this topic is really a matter of “the temporal sword” and that “many fantastically severe judgments have been sought in cases of this sort.” Nevertheless, he believes the Christian can handle the matter simply enough, by appealing to “the law of love.”
What would the law of love mean for the restoration of stolen goods? Luther explains that it applies to both parties in distinct ways depending upon their spiritual state:
…when a case of this sort is brought before you in which one is to make restitution to another, if they are both Christians the matter is soon settled; neither will withhold what belongs to the other, and neither will demand that it be returned. If only one of them is a Christian, namely, the one to whom restitution is due, it is again easy to settle, for he does not care whether restitution is ever made to him. The same is true if the one who is supposed to make restitution is a Christian, for he will do so.Temporal Authority in Luther’s Works, vol. 45, p. 127
The basic principle is simple enough. The Christian would rather work independent of the law as such. He merely wants to love his neighbor in the most direct way possible. Neither will withhold and neither will demand. If only one of the parties is a Christian, then he will act in the same way, no matter the behavior of his counterpart.
Luther adds more detail to this answer, some of which is sure to raise eyebrows:
But whether one be a Christian or not a Christian, you should decide the question of restitution as follows. If the debtor is poor and unable to make restitution, and the other party is not poor, then you should let the law of love prevail and acquit the debtor; for according to the law of love the other party is in any event obliged to relinquish the debt and, if necessary, to give him something besides.ibid p. 127
Pretty amazing, no? The law of love directs the aggrieved party to forgive the debt and indeed to go beyond this and give certain charitable goods to the debtor. This is the Cross enacted, and it certainly casts Luther’s “two kingdoms” in a new light.
However, the law of love can and does operate differently, according to circumstance. If the debtor is not poor, then the debtor should “restore as much as he can.” The limit, for Luther, is the debtor’s house and food and clothing enough for the debtor’s whole family. Thus, a debtor who has the means should repay the whole debt. If the debtor only has the means to repay half the debt, then he should do that.
But what if neither party is Christian or if one or both are “unwilling to be judged by the law of love”? In that case, Luther says, you can bring in some other judge who will operate according to natural law. One supposes here that the “law books” will come out and the usual business of lawyers will commence. Elsewhere in Luther’s writings, he said this: “the freedom to hunt game animals and birds, to catch fish, to use wood from the forest, their obligation to provide free labor, the amount of their rents and taxes, the death tax, etc., are all matters for the lawyers to discuss. It is not fitting that I, an evangelist, should judge or make decisions in such matters.”  If it goes to court, Luther can’t help you. Still, even if the lawyers have their way, Luther reminds his readers that the golden rule is a part of the natural law and no one should ask for a sentence that he would not be willing to have issued upon himself, were the circumstances reversed. In short, Luther believes that all restitution should be done in a limited way, with both parties seeking the good of the other in all that they do and demand.
Applying this to contemporary debates will no doubt be challenging, and Luther doesn’t fit neatly within the modern liberal and capitalistic social order. Still, his theology can be instructive. In the instance of an outstanding wrong, the wronged party should be eager to release or reduce his claims, and the party who has done the wrong should be eager to give back as much as he can.
|↑1||Luther’s works, vol. 45 : The Christian in Society II. (J. J. Pelikan, H. C. Oswald, & H. T. Lehmann, Eds.) (Vol. 45, p. 127). Philadelphia: Fortress Press, 1999.|
|↑2||The law of love is Luther’s shorthand for explaining how the believer is both absolutely free from all law and yet also a voluntary servant to all men. See his The Freedom of a Christian or, for a much lengthier study, Johannes Heckel’s Lex Charitatis: A Juristic Disquisition on Law in the Theology of Martin Luther. Later on in Temporal Authority, Luther says the law of love operates “without any lawbooks.”|
|↑3||Admonition to Peace: A Reply to the Twelve Articles of the Peasants in Swabia, in Luther’s works, vol. 46: The Christian in Society III. (J. J. Pelikan, H. C. Oswald, & H. T. Lehmann, Eds.) (Vol. 46, p. 39). Philadelphia: Fortress Press, 1999.|
|↑4||“For nature teaches—as does love—that I should do as I would be done by [Luke 6:31]. Therefore, I cannot strip another of his possessions, no matter how clear a right I have, so long as I am unwilling myself to be stripped of my goods. Rather, just as I would that another, in such circumstances, should relinquish his right in my favor, even so should I relinquish my rights,” Temporal Authority, Luther’s works, vol. 45, p. 128|