I'm rereading The Cost of Discipleship -- for my money one of the best books ever written on the Christian life, especially section one with its discussion of cheap grace vs. costly grace. Cheap grace is "the grace we bestow on ourselves." It's "grace without discipleship, grace without the cross." Costly grace is "costly because it costs a man his life, and it is grace because it gives a man the only true life." Even if you've never read the book you've probably heard the famous line -- "When Christ calls a man, he bids him come and die." Nachfolge (Discipleship), as it was originally called, may be the high point in Bonhoeffer's struggle to work out what it means for the Christian to be fully in the world, but not of the world. What makes the book so powerful is that it was for the author more than a theoretical struggle. In his case Christ's call led to a martyr's death at age 39. Bonhoeffer's struggle was a central preoccupation for Luther also. In chapter one Bonhoeffer gives an insightful analysis of Luther's breakthroughs on justification and calling, and identifies a misapprehension of those breakthroughs that had led to an epidemic of cheap grace within the Lutheran churches of Germany. Here is some of that.
When the Reformation came, the providence of God raised Martin Luther to restore the gospel of pure, costly grace. Luther passed through the cloister; he was a monk, and all this was part of the divine plan. Luther had left all to follow Christ on the path of absolute obedience. He had renounced the world in order to live the Christian life. He had learnt obedience to Christ and to his Church, because only he who is obedient can believe. The call to the cloister demanded of Luther the complete surrender of his life. But God shattered all his hopes. He showed him through the Scriptures that the following of Christ is not the achievement or merit of a select few, but the divine command to all Christians without distinction. Monasticism had transformed the humble work of discipleship into the meritorious activity of the saints, and the self-renunciation of discipleship into the flagrant spiritual self-assertion of the "religious." The world had crept into the very heart of the monastic life, and was once more making havoc. The monk's attempt to flee from the world turned out to be a subtle form of love for the world. The bottom having thus been knocked out of the religious life. Luther laid hold upon grace. Just as the whole world of monasticism was crashing about him in ruins, he saw God in Christ stretching forth his hand to save. He grasped that hand in faith, believing that "after all, nothing we can do is of any avail, however good a life we live." The grace which gave itself to him was a costly grace, and it shattered his whole existence. Once more he must leave his nets and follow. The first time was when he entered the monastery, when he had left everything behind except his pious self. This time even that was taken from him. He obeyed the call, not through any merit of his own, but simply through the grace of God. Luther did not hear the word: "Of course you have sinned, but now everything is forgiven, so you can stay as you are and enjoy the consolations of forgiveness." No, Luther had to leave the cloister and go back to the world, not because the world in itself was good and holy, but because even the cloister was only a part of the world. (pp. 47-48)
It is a fatal misunderstanding of Luther's action to suppose that his rediscovery of the gospel of pure grace offered a general dispensation from obedience to the command of Jesus, or that it was the great discovery of the Reformation that God's forgiving grace automatically conferred upon the world both righteousness and holiness. On the contrary, for Luther the Christian's worldly calling is sanctified only in so far as that calling registers the final, radical protest against the world. Only in so far as the Christian's secular calling is exercised in the following of Jesus does it receive from the gospel new sanction and justification. It was not the justification of sin, but the justification of the sinner that drove Luther from the cloister back into the world. . . . That was the secret of the gospel of the Reformation—the justification of the sinner. (pp. 48-49, emphasis mine)
Quotes from Bonhoeffer, The Cost of Discipleship (New York: Touchstone, 1995)