The fundamental purpose of the theocracy in Salem was to ensure that individuals are bound to a strict moral code of conduct in both personal and political terms. In linking God to the political setting, Salem citizens were content with not having a public and private distinction. Everything was subject to spiritual scrutiny on all levels, confirming that the people of Salem walked with " a candle to light the world," as Miller suggests. The theocracy was designed to bolster this, judging individuals on both political and spiritual levels. At the same time, the theocratic rule allowed individuals with religious backgrounds, such as Parris, to assume unprecedented levels of power. This is why Parris, and to a lesser extent, Hale, hold so much power in Salem. It is for this reason that Salem empowered the clergy so much. At the same time, a theocracy enabled the ruling elite of Salem to inflict power over individuals for breaking moral or spiritual codes of conflict, allowing a greater consolidation of power at the hands of the few over the many.
Because Salem was part of a theocracy during this era, there was no distinction between church and state: the ecclesiastical and the civic were one and the same. This means that church law was the law. Part of the purpose of setting up such a system had to do with the Puritan "errand into the wilderness." The Puritans believed that they were, very publicly, attempting to set up the perfect society -- the "city on a hill" -- that would light the way and show the rest of the world how a purified church was the perfect moral compass for a community.
The Puritans left England because they felt that the Anglican church had not done enough to separate itself from Roman Catholicism; they were extremists, by both 17th-century as well as 21st-century standards. This system consolidated a great deal of power in religious leaders, like ministers, because religious concerns were also political ones. It also helps to demonstrate why, when America was in the process of gaining its independence almost a century after the play takes place, the founders insisted on the separation of church and state.