Here's a brief primer on the basics of the Reformed doctrine of the two kingdoms.
As you consider the distinctions between these two kingdoms, please keep in mind the following presuppositions upon which the distinctions are based:
1). Christ is Lord of both kingdoms. He rules the kingdom of Christ (regnum gratiae) as the mediator of the covenant of grace, and he rules the civil kingdom (regnum potentiae) as sovereign Lord.
2). Every Christian is simultaneously a citizen of both kingdoms (Philippians 3:20; Romans 13:1-7).
3). The state is a post-fall, common grace institution given by God for the administration of justice and to restrain evil (Genesis 4:18 ff; Romans 13:1-7).
4). Non-Christians do not accept or acknowledge Christ's Lordship over the civil kingdom. This is the basis for the antithesis between Christian and non-Christian ways of thinking and doing. The failure to acknowledge Christ's Lordship renders one guilty before God (Romans 1:18-25), but does not invalidate the civil kingdom or the non-Christian's place in it.
5). While Paul calls Rome a minister of God (Romans 13:4), a generation later John describes that same empire as the beast, empowered by the dragon to persecute the people of God (Revelation 13). The Christian's confession that "Jesus is Lord," is likewise a confession that Caesar isn't. Christians must be cognizant that the kingdom of Christ can be seen as a threat to the power of the state. In fact, throughout Scripture, the state is the dragon's weapon of last resort against Christ and his kingdom.
6). From the time Adam was cast from Eden, God has intended the kingdom of Christ (the church) to dwell and advance in the midst of the civil kingdom (the world). This is the foundation for the missionary endeavors of the church, as well as a hedge against either utopianism (an over-realized eschatology) or escapism (i.e., monasticism).
The Distinction Between the Two Kingdoms
Christ's Kingdom
This is a spiritual kingdom and is ruled by Christ in his mediatorial office, in and through the historical manifestation of the covenant of grace (the church)
The Civil Kingdom
Here we speak of human government (the state) and Christ's rule over the earth and its creatures (the kingdom of power), according to God’s divine purpose for humanity (his eternal decree)
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Christ's Kingdom
The charter of Christ’s kingdom is the “Great Commission” (cf. Matthew 28:16-20)
The Civil Kingdom
The foundation of the civil kingdom is the “Cultural Mandate” (Genesis 1:28' Genesis 9:6-7)
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Christ's Kingdom
The church is given the keys of the kingdom (Matthew 16:19). The kingdom is closed to the unrepentant and heretics through church discipline
The Civil Kingdom
The state is given the sword (Romans 13:4). Those who break the law are subject to civil and criminal justice
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Christ's Kingdom
Requires “spiritual discernment” (1 Corinthians 1:13 ff; 2:14)
The Civil Kingdom
Requires the light of nature (i.e., general revelation--Romans 2:14-15)
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Christ's Kingdom
Christ’s kingdom is manifest on earth through the ordinary means of grace and through those biblically mandated activities of the church (i.e., evangelism, discipleship, and diaconal ministries)
The Civil Kingdom
The civil kingdom is manifest in all human cultural endeavors and governing institutions. In the civil kingdom, Christian citizens seek to be salt and light as they fulfill their callings and vocations along with their non-Christian neighbors
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Christ's Kingdom
The focus is upon our heavenly citizenship (Philippians 3:20-21)–which is realized in our membership in Christ’s church. The church is the assembly of Christian believers
The Civil Kingdom
The focus is upon our national citizenship (i.e., the country of our birth, or of which we are presently citizens). As such, this kingdom includes all people (Christians and non-Christians alike) who are citizens of a given nation/society
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Christ Kingdom
Entrance is granted into this kingdom only by virtue of regeneration. The focus is upon redemptive grace–God saving his people from the guilt and power of sin
The Civil Kingdom
Entrance into the civil kingdom is granted by virtue of birth (or naturalization). The focus here is upon common grace–God providing for all of his creatures
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Christ's Kingdom
As citizens of Christ’s kingdom, we live under the authority of Christ as revealed in Scripture (special revelation)
The Civil Kingdom
In the civil kingdom, we live under the authority of the laws of the land (i.e., general revelation and natural law)
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Consequences of Confusing the Two Kingdoms or Denying our Dual Citizenship
When these two kingdoms are confused or conflated, we see the rise of the "social gospel" of Protestant liberalism, American civil religion of the Christian right and the liberal left, as well as the rise of Constantianism (Christendom). The church must never take up the sword and Caesar must never enter the pulpit.
When the Christian's dual citizenship is denied (or ignored), we see the rise of asceticism, pietism, radical pacifism and Anabaptism.
Therefore, a Christian is free to work with non-Christians in the civil kingdom to promote the common good and preserve a just society. But the kingdom of Christ is tied to word and sacrament and the church (and its officers and members) must speak to the pressing moral issues of the day in terms of law and gospel, not in terms of the political activism found in the civil kingdom. Yes, the church must address moral issues as they are found and framed in Scripture (through the preaching and catechetical function of the church), but the church is not to engage in partisan politics, nor endorse any political party or candidate.