Reformed theology rightly sees the third use of the law as the ultimate goal for the Christian in this world, but this definition includes conscious improvement and lacks the christological dimension which characterizes the Lutheran approach. In Lutheran theology the law can also be seen as the goal of Christian life, but it must be defined as a completed law which is fulfilled in Christ without demands and which expresses itself in Christian life. Paradoxically the Christian has no internal evidence or feeling within himself that he is fulfilling the law. Rather than seeing himself making progress toward a greater holiness, which he may be, he becomes increasingly aware of his standing before God, coram deo, as a sinner (FC SD VI.8, Romans 7:18; 7:15; 7:23; Galatians 5:17). As faith increases so does the awareness of sin and he loses all sense of an internal, personal righteousness. This condition belongs to the Christian according to his existence as simul iustus et peccator (SD VI.7-9). Hardly unique to the Formula of Concord, this teaching is already present in the Apology: “Fifth, if we had to believe that after our renewal we must become acceptable not by faith on account of Christ but on account of our keeping of the law, our conscience would never find rest (Ap. IV.164A). Any definition of the third use of the law in terms of progress toward moral perfection must be dismissed, as it would hardly be different from how the Pharisees understood and used the law. Lutheran theology has a doctrine of Christian and spiritual perfection but defines this as the increase of both faith and sorrow over sins. By faith they hear from the gospel that they are being perfected in Christ and in Him are receiving, sharing, and doing His righteousness (third use), but within the reality of their own experience they see themselves more and more as sinners condemned by the law’s accusations (second use). They live and die as sinners (second use), pleading only for God’s mercy in Christ (gospel). At this point the pivotal difference between Reformed and Lutheran theology becomes evident. For Calvin, God created and saves man for His glory, which is seen in the proper moral behavior of believers and of society in general. Sadly, the Geneva reformer also sees divine glory in the fate of the damned. Lutheran theology begins and ends with the pity of God for sinners (law and gospel), as is evident in the first five articles of the Augsburg Confession. He orders all things to accomplish their salvation, and hence justification, not divine sovereignty, is at the heart of Lutheran theology. The Lutheran doctrine of the third use of the law is rooted in the article of justification and confirms the article on good works: “For we do not abolish the law, Paul says [Romans 3:31], but we establish it, because when we receive the Holy Spirit by faith the fulfillment of the law necessarily follows, through which love, patience, chastity, and other fruits of the Spirit continually grow” (Ap. XX.15).
“Confessional Lutheran Dogmatics: Law and Gospel and The Means of Grace”, pages 83-84