By all accounts, Modernity dates its birth from 1648 at the Peace of Westphalia. The Peace of Westphalia ended the 30 Years War and established the modern relationship between the Church and the State. Part of this was the creation of a system within the Holy Roman Empire that gave unrestricted control of the Church to the Secular State. Other confessions of faith would be tolerated (for example, Lutherans in Catholic territories), but their worship had to be private and occur at places and times designated by the Secular State. Church structure and doctrine were to be dictated by the sovereign.
It should be observed that particular social relations are not simply a neutral state of affairs. They inculcate in people, and also presuppose, a particular ontic structure to reality. So, for example, restrictions of Christianity to a private realm and the whole subordination of the Church to the State both presupposes certain truths about religion and its authority, as well as the certain things about metaphysics
What then does this assume? Specifically, it assumes that creation is itself something of a self-contained autonomous realm. God, religion, and the supernatural are divided from this realm into the safe region of the conscience (i.e., the "private" rather than "public" practice of religion) and the transcendent. Hence, contrary to the older Christian traditions of both natural law and typological scriptural interpretation (both of which assume that the pattern of historical events and the structure of nature have possess inherent meaning), there is no inherent meaning to reality. Reality is a neutral, autonomous realm, made up of material causes, discernible and easily controlled by rational and autonomous centered human subjects (think Decartes and Bacon!). Humans may from the perspective of their subjectivity superimpose meaning on neutral, material causes, and events. But this is subjective, private judgments which cannot be counted in the public realm as the real and the objective.
From these assumptions, it becomes clear as to why religion, science, and secularity has emerged the way it has in the previous few centuries. As we can see, at its heart the emergence of Modernity has very little to do (as we are constantly told in the Liberal narrative of progress!) with the beginnings of rational investigations of reality, the recognition of human dignity, and the destruction of arbitrary authority (actually, if one looks at the history of Modernity, the opposite is the case! But that is another blog post). Rather, the modern insistence of the split between fact/value, as well the insistence that a appeal to material causes over supernatural ones is inherently more rational, is simply a byproduct of a certain social narration of reality that has emerged from modern Church/State relations. In a word: the realm of the material, where the State has a monopoly of control, is the realm of the real.
Logically speaking, the Secular State can only control material causes. It cannot control supernatural causes. To claim then that there are causes which are not material but supernatural, is to put certain realities outside of the control of the State. This is seen as highly dangerous, since the interference of supernatural claims about the real would result in extreme social disruption. In fact, this is what the architects of Modernity believed had happened during the 30 Years War. Lutherans, Calvinists, and Catholics had all had competing claims about supernatural authority. The state, unable to restrict them, had then been driven into prolonged and irrational war. English authors viewed the English civil war in much the same way. Of course, this isn't really what happened, but this is what they believed had happened and they therefore considered it important to remedy it.
For this reason, it is unsurprising that Thomas Hobbes (for example) begins Leviathan with a materialist account of human nature. In other words, if everything is material, then the State can control everything and there won't be another English civil war (i.e., a war about supernatural truth). Booyah! Hobbes accepts that the state will possess a religion, but that the king or whoever the sovereign ends up being should have the right to interpret Scripture. Contrary interpretation are socially disruptive and therefore the State has the right to suppress them. In The Social Contract, Rousseau tells us that the State should simply make up a religion that will reinforce its monopoly on power. It doesn't matter what it teaches, but if people contradict it they should be killed. The French revolutionaries followed his advice, and established the "Goddess of Reason"in Notre Dame cathedral.
This also puts theological Liberalism in new perspective as well. To put it mildly, theological Liberalism has little to recommend itself on purely logical grounds. Bishop Spong tells us we can't believe in miracles. But why not? It's an easy syllogism: If God is God and therefore the creator, he can do anything. The virgin birth falls into the category of "anything." So does water into wine, and the Incarnation and whatever else. But when you realize the Modernity's social narration of reality restricts religion to the realm of private judgment (value and not fact!), then it makes a bit more sense why theological Liberalism would be appealing.
First, with regard to Biblical interpretation, the Scriptures are simply re-narrated on the basis of the modernist distinction between fact/value. If we admit the supernatural ever occurred, then it would mean that the real was not restricted to the material and therefore the monopoly of the Secular State would be broken. Hence the enterprise of modern critical Biblical scholarship, invented by Spinoza and Thomas Hobbes in (you guessed it!) the mid-17th century, simply goes through the Bible and re-describes the text as the product imminent social forces-rather than supernatural ones. Do these scholars have access to these social forces? No. Can they prove that they existed? Not really. Nevertheless, what fails logically and historically, works for modern people on a rhetorical level. For one has been acculturated into reading all reality on the basis of purely material causes controllable by the State, it would seem like special pleading to read the Scriptures differently (we hear this often in the plea to read the Bible like "any other book"). Since Scripture can still provide "meaning" and "value" (even though we are told that they are factually untrue in varying degrees), no theological harm is done (or so they claim!). In fact, if you attended a mainline Protestant college or seminary (as I did) then recognizing this distinction of fact and value as a basis of Scripture interpretation is seen as a sign of theological maturity. Thinking that "this stuff really had to happen" for there to be theological truth in it, is seen as something childish. It is something which people will get over once they have matured and learned more.
Hence, theological Liberalism (and other forms of modern theology) tend to then restrict its theology to value and meaning. This can been seen in greater and lesser degrees. For people like Schleiermacher, Christianity is all about the experience of absolute dependency mediated through Jesus. The historical claims for this are necessary (Jesus had to have existed and had superior "God-consciousness"), but fairly minimal. Again, theology and God are restricted to the inner and private realm. They are no threat to the claims of the secular realm. Neo-orthodoxy (of both the Barthian and Bultmannian varieties) also takes this tack. Barth in a lesser degree by his pious, yet deceptive rhetoric of transcendence; Bultmann (and Ebeling along with him) with is inversion of the Reformational relationship between faith and the Word of God. For this reason, Christ "rose in the mind of the disciples" and all that clap-trap. In varying degrees, theology imposes "meaning" on the realm of "facts." Being private meaning, it lacks the force of public truth claims about how reality actually works and therefore perpetuates the modernist settlement, thereby bolstering the unrestricted power of the State to control every aspect of human life-including its dictation of what constitutes the real. Alternatively, when theology has made claims about how the public realm should be run, it is viewed as destructive (i.e., the anti-gay marriage movement) or helpful to the degree that it plays into the Enlightenment narrative of progress (i.e., Liberation and Feminist theology).