I recently got an e-mail from a LCMS pastor who had received an essay from one of his parishioner supposedly disproving the Lutheran view of the Lord's Supper. This parishioner had previously been Presbyterian and apparently for some strange reason held on to Calvin's view of the Lord's Supper. Why one would go over the Lutheranism if one held this view is pretty much beyond me, but that's another story.
In any case, chief among this essay's arguments was that no one actually takes the words of institution literally. Calvin makes this argument in the third book of the Institutes, so it's sort of an old argument.
Here's how the argument goes: "Is" for the Catholics means "is transubstantiated." "Is" for the Lutheran means "this is my body and blood along with the bread and wine." Neither therefore gives a literal description of what Jesus is holding in his hand. Because neither confession holds a "literal" view of the words of institution, each confession's argument that "Jesus meant what he said" isn't valid. Hence, the Reformed view is just another non-literal reading of the words of institution and when you combine it was the Christological argument it makes the most sense.
This argument is important to respond to. First, on one level, one could say that the words of institution are in a sense figurative according to Luther's reading. In his debates with Zwingli (see AE 37 in particular), Luther states that Jesus' words express a synedoche, wherein a whole is represented by its parts. The classic example of this is "all hands on deck." In other words, all sailors are represented by their "hands" coming to the deck of the ship. This reading of the words of institution is well justified by Paul's statements in 1 Cor. that the "bread we eat is the communion of the body of Christ, etc." In other words, both substances are there and consequently the words of institution express the presence of Jesus through the elements of bread and wine in the form of the synedoche perfectly.
On another level though, there is nothing "figurative" about the words of institution and the Reformed fundamentally misunderstand how speech acts work on multiple levels.
For the Reformed, the assumption is that words somehow just signify things. So you point at a table and say "table" because the noise "table" is a symbol for the object. Certain speech-acts do function this way. Nevertheless, they also function in one might say, an "effective" manner. So, for example, when I say "I pronounce you man and wife" the words aren't really signifying a reality, they're giving a reality of "marriage."
The words of institution function the same way- and not just in a human way, but by divine power. Luther says that there is a distinction between "call-words" (first class that I spoke of) and "do-words" (the second class). So, when the Reformed hear the words of institution, they mistakenly think that they call "call words." Hence the critique "well, but isn't it also bread and wine also, not just body and blood?" This suggests that they take the words to be an ontological description of the elements. They are that of course, but they're more than that! They are a promise of receiving the body and blood through the reception of the elements. The function of the words is to promise of the body and blood of Christ to faith. Hence to say that they are non-literal is non-sense, because they give what is literally promised.
Faith receives God's literal promises. I think that this is the reason why Luther was adamant about the sacrament. His understanding of faith that he reach during the indulgence controversy was that faith was the means by which God's promises in Christ were to be tapped into. Faith gains what it gains by believing what is promised, no matter how fantastic. So too, the sacrament must be taken to be what it is because it is a word received by faith. It isn't a proposition to be figured out, but a promise received.