[I repost this comment from the Blog of Concord site in answer to some questions my brother-in-law inquired about upon reading AC V. I hope they will be helpful to others too.]
The current Bishop of Rome published these words in 1986. They have a familiar ring to them: "Luther did not have in mind founding a Lutheran Church. For him the focus of the concept of the Church was to be found in the congregation. For relationships that transcended the congregation, in view of the logic of developments at that time, one depended as far as organization was concerned on the political structure, in other words on the princes. Thus there arose the *Land* or provincial Churches in which the political structure took the place of the structure of its own which the Church lacked. Much has changed in this field sinc 1918, but the Church continues to exist in provincial Churches which are then united in Church federations. It is obvious that when the concept Church is applied to this kind of accidental historical formation the word takes on a different meaning from that which is envisaged in the case of the expression 'Catholic Church'. Provincial Churches are not 'Church' in the theological sense but organizational forms of Christian congregations which are empirically useful or even necessary but which can be swapped for other structures. Luther was only able to transfer Church structures to the princedoms because he did not regard the concept of the Church as established in these structures. But for Catholics, on the contrary, the Catholic Church, that is the community of the bishops among themselves and with the pope, is as such something established by the Lord which is irreplaceable and cannot be swapped for anything else." (*Church, Ecumenism, and Politics* p. 114, 115)
What I think the present Bishop of Rome correctly understands in this is that to Lutherans polity is not a matter divinely mandated, not a matter on which the Church's existence hangs. Lutherans now are and have in the past lived in utterly disparate polities - and this does not hinder the recognition of a shared faith. Thus, for example, right now the Lutheran Church-Missouri Synod is in communio in sacris with the Archbishop of Latvia and the parishes and priests and bishops that he superintends.
What I am not sure the present Bishop of Rome understands is HOW for "Luther the concept of Church was to be found in the congregation."
For Luther and for the Lutheran Church first and foremost the Church "is, namely, the holy believers and lambs who hear the voice of their Shepherd." SA III, XII:2 This is in perfect accord with the Apology's assertion: "at its core, it [the Church] is a fellowship of faith and the Holy Spirit in hearts." Ap VII/VIII:5 Thus while the marks which locate the Church are invariably bound up with local congregations, the Church so understood is "no Platonic state, as some wickedly charge. But we do say that this Church exists: truly believing and righteous people, scattered throughout the world." Ap VII/VIII:20.
The Church is not then congregations, but congregation. The singular in AC 7 is vital. The Church is NOT in the Lutheran understanding a series of unrelated congregations. The Church is rather "the congregation of saints" among whom the Gospel is purely taught and the Sacraments are correctly administered. Not enough thought is given to the force of that singular: *congregatio sanctorum* in Latin, but even more explicit auf Deutsch *die Versammlung ALLER Gläubigen.* This is to look at the Church from the view afforded in the Revelation of St. John.
The Church is the one assembly of all believers. It is not many local assemblies, but ONE assembly. And the reality that is confessed behind this is that what the local congregation manifests is never merely community with a broad spectrum of similar-minded folk alive now. No. The congregation manifests the assembly of ALL believers. When we worship together, gathered in the Divine Name and receiving the saving Gospel and interceding for the world, and partaking of the Lamb's Feast, we are not present with some piece, some miniscule fraction of the Church. We are present with the whole of it. Hebrews 12 bears this out when it describes what you have come to when you gather as Church, where there is the blood that speaks a better word than Abel's. But it is also shown in numerous other ways in the Sacred Scriptures. Find Jesus the Lord, the Head of the Body, and you will invariably find not pieces, but the whole of the Body with Him.
When Paul directs the Corinthians to excommunicate a man, he assures them that he will be there with them in s[S?]pirit. When John is worshipping on Patmos, the veil is drawn back and he finds that he is not worshipping alone, but with the whole Church. When in the confiteor at Compline we confess "to almighty God before the whole company of heaven and to you my brothers and sisters" you should not be thinking that "brothers and sisters" are only those you can see in the room. The Church remains whole, one, indivisible, and entire. It is the assembly SINGULAR, the congregation SINGULAR of all believers. To come together as Church [1 Cor. 11] and partake of the Eucharist is to be manifest that we are NOT one of many, but ONE Body.
This is a reality which by its very nature must be believed and cannot be seen. But it is confessed and manifested in the Scriptures and in the liturgy. "Holy believers and lambs who hear the voice of their Shepherd." What this means for the ecumenical task is not resignation to the mess that now is, but it does mean that we are given the responsibility of manifesting rather than creating this churchly unity, for the churchly unity always will be and remain a gift given by God the Holy Spirit as He binds hearts to Jesus Christ and so one another and brings us into unity with the inner communion of the Blessed Trinity.
In that sense, remembering the definition of Church that Luther was working with, the congregation was indeed the locus of his thought on "church." How could it be otherwise?