When I published my article "A Lutheran Response to Justification: Five Views," (which can be found here) I was suspected by some of being guilty of the teaching of Osiander, which was condemned by the Formula of Concord. This is due to my adherence to certain themes of the Finnish interpretation of Luther; namely, that Luther's soteriology is participationist rather than purely juridical. I argued that justification is not a bare declaration wherein Christ's righteousness is passed to the believer in the heavenly Law-court, but it involves the reception of the person of Christ. In other words, Christ's attributes are not separated from His person. One does not receive Christ's righteousness without receiving Christ Himself.
I want to clear up some misconceptions, since my upcoming book "The Righteousness of One" is highly indebted to the Finnish school of thought. In my view, Luther teaches that Christ is present in faith. Faith receives Christ's person, and based on this mystical union, the believer is declared righteous by the righteousness of Christ. I agree with much of what Mannermaa has done in finding a doctrine of theosis in Luther, but I disagree with him on some major points. There is not an exact identification of justification/theosis in Luther's thought, but they are related concepts, and both important to his theological project.
First, let me clarify that I disagree with much of what has been done by figures other than Mannermaa in this school of thinking. Karkkainen, for example, conflates justification and theosis, so as to neglect important reformation themes, such as the imputation of Christ's righteousness which are central to Luther's thought. For Karkkainen, "Justification for Luther means primarily participation in God through the indwelling of Christ in the heart through the Spirit." (One With God, 59) I think we would do better to take Luther's own word for it when he defines justification as the fact that "through faith we receive a different, new, clean heart and that, for the sake of Christ our mediator, God will and does regard us as completely righteous and holy." (SA 12:1)For Luther, there is a real participation in God through the indwelling Christ, but this is not to be equated with justification itself.
It's argued by many in the Confessional Lutheran camp that the Finnish interpretation of Luther is essentially a modified form of Osiander's theology. It is also argued by the Finnish writers that the Lutheran Confessions depart from Luther's teaching that Christ is present in faith, placing mystical union as subsequent to justification, rather than vice versa. I don't think such a strict division exists between Luther and the Formula on this point.
The Formula does not condemn what is proposed by Mannermaa as Luther's teaching on mystical union. What is condemned is the teaching of Osiander that one is justified based on the indwelling divine nature of Christ. Contrary to this, Luther teaches that justification comes as a result of both natures of Christ, primarily through his life giving death and resurrection. The other false teaching of Osiander, as condemned by the Formula, is that believers are in any sense justified by their own works. That's why the majority of Article III argues, not against mystical union, but against the contention that justification is based on the renewal or good works of the sinner. Look, for example at III.35:
"Therefore, even if the converted and believers have the beginnings of renewal, sanctification, love, virtues, and good works, yet these cannot, should not, and must not be introduced or mixed with the article of justification before God, so that the proper honor may be accorded to our Redeemer Christ ad (because our new obedience is imperfect and impure) so that the consciences under attack may have a reliable comfort." (FC SD III.35)
The point here is that justification is not based on infused love, virtues, or good works inherent in the believer. Neither I, nor Mannermaa, have taught this. It may be argued however that mystical union is, in the Formula, always a result of justification, rather than a prior or simultaneous reality: "this indwelling is a result of the righteousness of faith which precedes it." (FC SD III.54) Note that what is rejected is the idea that this indwelling that is a result of justification. It is rejected that the Osiandrian sense of indwelling, the infusion of virtues and love, precedes faith, because this would result in a righteousness based on works. That doesn't mean that indwelling of the person of Christ in faith must be subsequent to justification. It does not deny that Christ gives his whole person to the believer in justification. In fact, the Confessions reject the notion that "not God but only the gifts of God dwell in believers." (FC SD III.65)
It is worth noting that the Article III of the Formula says, "For any further, necessary explanation of this lofty and sublime article on justification before God, upon which the salvation of our souls depends, we wish to recommend to everyone the wonderful, magnificent exposition by Dr. Luther of St. Paul's Epistle to the Galatians, and for the sake of brevity we refer to it at this point." (FC SD III.67) This gives the Galatians commentary a semi-Confessional status, since the Lutheran fathers agreed unanimously to point to this text as a correct exposition to justification. It is the Galatians commentary of Luther which has in fact served as the basis for the Finnish school of thought. In my own reading of Luther's Galatians commentary, it seems undeniable that Christ is present in faith, and that justification involves the receiving of Christ's person as righteousness.
I hope this helps clarify some of my positions on this issue. I affirm sola fide, the imputation of Christ's righteousness, Christ's active and passive obedience, and all the other traditional themes associated with justification in the Lutheran tradition. I am trying to clarify this, since some seem to think that my association with the Finnish school of thought has led me to an unorthodox approach to justification. If you are interested in this issue, take a look at Kurt Marquart's essay "Luther and Theosis," which agrees with my position on the issue.