To frame the issue more precisely, the question is not whether a society or nation ought to worship the one true God rightly. Societies should certainly worship the one true God according to His commands. Furthermore, the question is not whether false worshippers deserve punishment. God will certainly punish them temporally in this life as well as eternally in the life to come, if they do not repent.
This question has to do with the limits of human authorities and the jurisdictional boundaries of the civil government. Does the civil government have the authority to punish violations of the first table of the moral law of God? Does God give the state the power to punish false worship, blasphemy, and heresy, and does God give the state the power to enforce or coerce orthodox worship within the church and throughout its jurisdiction?
Baptists, Independents (Congregationalists) and American Reformed Christians have spoken with a unified voice on this question. They have insisted on religious liberty for Christians and all human beings. Here are some of their arguments (I’ve used David VanDrunen’s book, Politics After Christendom, for many of these points):
First, it is evil to try to coerce a person’s conscience through external force because God alone is Lord of the conscience. External coercion in no way advances the kingdom of God, but only turns people into hypocrites who pretend to worship God, but actually disobey Him in their hearts and lives. Isaiah 29:13 says, “This people draw near with their mouth and honor me with their lips, while their hearts are far from me, and their fear of me is a commandment taught by men.” Jesus said, “If my kingdom were of this world, my servants would have been fighting, that I might not be delivered over to the Jews. But my kingdom is not of this world” (Jn 18:36). Christ’s kingdom is not a kingdom of outward power or force.
Second, God alone can cause a sinner to forsake false worship and become a true worshipper. The Lord Jesus is clear when He says, “No one can come to me, unless it is granted him by the Father” (Jn 6:65). Government coercion can never regenerate a sinner’s heart to make him forsake his idols or worship God faithfully. God alone changes the hearts of elect sinners through effectual calling, turning them into true worshippers. Since government enforced worship is utterly impossible, the regulation of worship is outside the jurisdiction of the government.
Third, the Old Testament theocracy is abolished. The old covenant judicial law had punishments for blasphemy, idolatry, and false worship which served particular purposes until the coming of Christ (Gal 3:23-25), but the old covenant is abolished now that Christ has come (Heb 8:7, 13; 10:9). Furthermore, the harsh penalties of the Old Testament theocracy (Acts 15:10) were types of eternal judgment (Heb 10:28-29), and were intented to perserve the line of Christ until the coming of Christ (Gal 3:19), but they were never given as a universal moral norm for all nations. See here for a refutation of theonomy (the idea that the old covenant judicial law is morally binding upon all nations).
Fourth, for the first several hundred years, the fathers of the church rejected any notion of state compulsion in matters of the first table of the law of God. The earliest Christians would never have imagined that people ought to be compelled by the state to be Christians or punished for false worship. Rather, they held that Christ was to be worshipped freely, from the heart, not to avoid the sword of the state.
Fifth, the civil magistrates of Gentile nations lack any biblical or natural authorization to compel people to be members of a particular church or to worship God rightly. The civil jurisdiction is restricted to outward matters of the body, and they have no power over inward matters of the soul and conscience (see Neh 9:37). Beliefs, convictions, and personal speech are matters of the conscience and soul, not the body, and therefore out outside the regulative authority of civil governments.
Sixth, in Genesis 9, God established a common covenant with the whole world that does not enforce the first table. The Noahic covenant is a common covenant because it’s shared in common with believers and unbelievers. In this covenant, God only gives society the power of the sword to punish murderers, and by implication to enforce lex talionis, an eye for an eye, a tooth for a tooth, for all crimes that injure fellow citizens. In Genesis 9, God does not give society the power to punish idolaters or to enforce worship.
Seventh, in Romans 13, Paul never mentions the first table. It teaches that civil government has the power to punish those who do evil (Rom 13:1-4), and it lists commandments from the second table of the moral law, but not from the first table (Rom 13:9). While one could argue that Paul was simply supplying a partial list, there seems to be an implication that only the second table is in view when it comes to punishable civil offenses in a Gentile culture.
Eighth, right government of a society does not require its rulers to be experts in the Scriptures, but non-Christian cultures can and have flourished. Consider the great historic kingdoms and empires that had no Christian witness, and yet they were able to maintain order and generally uphold the law of nature as it pertains to the right functioning of society. The early Romans and Greeks are such examples. The pagans know by nature what is right and wrong and outwardly seek to practice it for their own good due to the nature of the world God has made (Rom 2:14-15; cf. 1 Cor 5:1).
Ninth, if civil government is given the power of the sword to punish heretics and coerce orthodox worship, serious problems will arise in a society. We know this from the historic records of societies where it has been tried. The government will make martyrs out of heretics and wolves, amplifying their voices and doing great harm. There will be endless bitter and divisive battles as to what constitutes orthodoxy, which must be imposed by force. And government coercion of the conscience will limit the freedom of theologians to study the Scriptures, since orthodoxy and right worship would be determined by the state. Further a state with power to command worship and legislate the conscience would have the absolute right to rule all things and would inevitably be corrupted and become tyrannical in our cursed world.
Tenth, if you look at the OT prophetic denunciations of pagan nations like Egypt, Assyria, and Babylon, the prophets do not pronounce judgment upon them for idol worship. Rather the prophets judged pagan nations for great injustices in their societies. The prophets condemned Israel for idolatry, but not the pagan nations. This implies that it isn’t the responsibility of pagan societies to coerce obedience to the first table.
Eleventh, the golden rule applies in that since you wouldn’t want the state to force you to worship in the way it determines, you shouldn’t want the state to force others to worship in the way it determines either. Christ teaches, “Whatever you wish that others would do to you, do also to them, for this is the law and the prophets” (Matt 7:12). If you wouldn’t want people coercing you to worship their god or gods according to their consciences, then you shouldn’t try to coerce them to worship your God according to your conscience.