In this chapter he is addressing the question of whether the common grace that impacts social life and society is exclusively mediated through government or not:
There can therefore be no disputing the independent character of the life of the people. Society, family, and household lead their own independent existence—an existence that is neither created, nor maintained, nor regulated by the government. We can go even further by stating that the individual in that society also possesses his own realm of existence in terms of his own mind and heart, to which he is fully entitled. Anyone who has his own convictions, his own confession, his own voice, his own sensibilities, and his own calling, and who possesses this in summary form in the sacred sphere of his conscience, can and in fact should be said to possess his own life sphere which must also be distinguished from society. That sphere, in fact, lies beyond the reach of the government. It is therefore simply not true that government encompasses our entire life and that on its own authority it must regulate our entire lives. On the contrary, we lead our own personal lives independently; the same is true for households and for society as a whole. Over a particular people that possesses a life of its own, government fulfills a limited and specific role that it has been assigned. Therefore, government absolutely may not be permitted to do whatever it wants. There are things it must and may do. But there are also things it does not have the freedom to do. There exist boundaries between the institutional life of government and the life of society, and government must respect those boundaries. Thus, whatever the people—and individuals within the population—possess as their own private sphere constitutes the rights and liberties of that people, which must be defended tooth and nail against every abuse of power on the part of the government. (CG 3.11.3)
It is easy to understand from a passage like this why sphere sovereignty is rightly understood as a theory of limited government. What is of particular interest here is that Kuyper connects sphere sovereignty not only with what we might call social institutions, like the family, businesses, churches, and the like, but with individuals as well. In Our Program Kuyper gave an especially strong articulation of the liberty of the conscience with respect to state action: “The conscience marks a boundary that the state may never cross.”
The summary here is also balanced because it allows for the government to have its own legitimate but limited sphere of activity and authority as well. Sphere sovereignty is thus both a theory of limited as well as legitimate government.
This balanced perspective avoids two dangers. First, one might absolutize government authority, and allow it to dominate and tyrannize all other aspects of life. But second, a view that totally delegitimizes the government invites tyranny as well, as either the state will be powerless to defend the rule of law, property, and other civil liberties, or the government will be invited to (in view of its supposedly tyrannical nature) simply act capriciously as a victorious warlord.
Common Grace volume 3 is due out next year. The first two volumes are available now.