That is, among Christians, forgiveness of sins shall have no measure and no end; one shall forgive the other always and beware of taking revenge; for this belongs to God alone, and His majesty and power we should never interfere with. This the parable treats of at some length, the reasons for which we will hereafter collect and notice one after another…. For the command concerning forgiveness of sins we should never apply to kingdoms of this world, in which offices and persons are not alike, but where one has always power and command over the other. Here malice is not to be tolerated nor are people to be allowed to do what they please; but misconduct must be punished and people must be admonished to live honorably and righteously.
It is not designed here to teach that a father should forgive his children everything and over look their rascality. He should punish, and for give nothing. So master and mistress and the temporal magistrate should not forgive their servants and subjects their misdemeanor, but punish them. For it is the wicked habit of the world to grow worse and worse the more its transgressions are overlooked; and if children do not want to be trained by father and mother, they must be trained by the executioner, who has to put an end to their wantonness.
Therefore this command does not pertain to the kingdoms of this world, where persons and offices are not alike, as was said before, but to the kingdom of heaven, in which we are all alike and have but one Lord, who is to be enjoyed by all. This “kingdom of heaven” begins here on earth, and is otherwise called the Christian Church on earth, in which God reigns by His Word and Spirit. (Luther’s House Postil, Sermon for the Twenty-Second Sunday after Trinity, Volume 3, p. 864)