This name [“theocracy”] is not found in the Scriptures, although it admirably describes what the Biblical account represents Israel’s constitution to have been. Probably the term was coined by Josephus. He observes in regard to the governments of other nations, that some of these were monarchies, others oligarchies, and still others democracies; what God set up among Israel was a theocracy. … The laws under which Israel lived not merely had the divine sanction behind them in the general sense in which all law and order ultimately derives from God through general revelation by way of the conscience, but in the specific sense, that Jehovah had directly revealed the law. In other words Jehovah in person performed the task usually falling to a human king. And in the sequel also, Jehovah by supernatural interposition, when necessary, continued to act the role of King of the nation. This fact was so deeply embedded in the consciousness of the leaders of Israel that still in the time of Gideon and Samuel it was felt to forbid the setting up of a purely human kingdom. The union of the religious lordship and the national kingship in the one Person of Jehovah involved that among Israel civil and religious life were inextricably interwoven. If the union had happened to exist in any other person but God, a division of the two spheres of relationship might have been conceivable. The bond to God is so one and indivisible that no separation of the one from the other can be conceived. Hence the later prophetic condemnation of politics, not merely wicked politics, but politics per se, as derogatory to the royal prerogative of Jehovah.
Further it ought to be noticed that between these two concentric spheres the religious one has the pre-eminence. It is that for the sake of which the other exists. For our system of political government such an interrelation would, of course, seen [sic] a serious, intolerable defect. Not so among Israel. The chief end for which Israel had been created was not to teach the world lessons in political economy, but in the midst of a world of paganism to teach true religion, even at the sacrifice of much secular propaganda and advantage.
Nor was it merely a question of teaching religion for the present world. A missionary institution the theocracy was never intended to be in its Old Testament state. The significance of the unique organization of Israel can be rightly measured only by remembering that the theocracy typified nothing short of the perfected kingdom of God, the consummate state of Heaven. In this ideal state there will be no longer any place for the distinction between church and state. The former will have absorbed the latter.
Who said it? Usual rules apply.
And what’s he (there you go, I just gave you a clue that eliminates half the people that ever lived) talking about with “prophetic condemnation of politics per se“? He says it without citation like we’re supposed to know what passages he’s talking about.