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Having proved that a favorable ruling (grace) in the divine court could not be obtained by presenting one's own works, but that such grace can only be attained through faith in Christ, Paul then proceeds to tell us what we have actually received by faith.
Romans 4 is the great chapter on the imputation of righteousness, where God calls what is not as though it were. He has already made reference to the Day of Atonement in 3:25, speaking of the blood of the goat that was sprinkled on the mercy seat as a "propitiation" (expiation) for our sin. But Romans 4 enlarges upon this idea, showing us the underlying implications of it. Romans 4, then, is the main New Testament exposition of the work that Jesus did on the cross, which fulfilled the prophecy of the goat that was killed on the Day of Atonement.
1 What then shall we say that Abraham, our forefather according to the flesh, has found?
The Emphatic Diaglott renders this more literally,
1 What, then, shall we say of Abraham, our forefather according to the flesh?
Abraham is the father of faith, so we must again turn to Abraham to see what his faith achieved.
2 For if Abraham was justified by works, he has something to boast about; but not before God.
Paul already made the point in 3:27 that no man has grounds to boast about his great achievements in following the Law. All have sinned, and the Law cannot justify any sinner, not even Abraham.
3 For what does the Scripture say? "And Abraham believed God, and it was reckoned to him as righteousness." 4 Now to the one who works, his wage is not reckoned as a favor, but as what is due. 5 But to the one who does not work, but believes in Him who justifies the ungodly, his faith is reckoned as righteousness.
Paul compares the laborer with the unemployed. A worker deserves to be paid, and the employer owes wages to his employees. But if an unemployed man is given alms, it is done as a "favor."
Paul quotes Gen. 15:6 to show that God's favor, or grace, was extended to Abraham, not because of his works, but on the grounds of his faith. Faith is simply a matter of believing what God has said.
The Greek word pistis is a noun that means "faith." The verb form is pisteuo, which we translate as "believe," because in English we do not use "faith" as a verb. Some have tried to make a distinction between faith and belief, when in fact they come from the same Greek word. The only difference is that one is the noun and the other is the verb. Hence, Abraham "believed" God, because he had "faith."
The next most important Greek word to understand is logizomai, translated "reckoned." The KJV translates it in various ways: "reckoned" (4:4); "counted" (4:3, 5), and "imputed" (4:6, 8). Paul uses this word 15 times in Romans 4, but its real definition is given in verse 17, where God calls what is not as though it were.
Paul uses David as a second illustration of how righteousness is imputed by faith.
6 just as David also speaks of the blessing upon the man to whom God reckonsrighteousness apart from works: 7 "Blessed are those whose lawless deeds have been forgiven, and whose sins have been covered. 8 Blessed is the man whose sin the Lord will not take into account."
This is taken from Psalm 32:1, 2, quoting from the Septuagint Greek translation. The Septuagint was the standard showing how Hebrew words were expressed in Greek. So whereas the Hebrew word for "reckon" is khashav, the Septuagint translates this word as logizomai. This is true for both Gen. 15:6 and Psalm 32:1, 2.
So Paul shows us that not only Abraham, but David too spoke of reckoning men righteous. David defines it (Rom. 4:8) as "the man whose sin the Lord will not take into account." David acknowledges that man is yet sinful, but somehow the Lord does not take it into account. He "forbears" or "tolerates" it in the sense that Paul mentions earlier in 3:25. On what grounds? Because his "sins have been covered" (4:7).
In other words, it is all about the covering, or "atonement," of sin. The Hebrew word kaphar means to "cover." In fact, our English word "cover" is derived from the Hebrew kaphar. The Day of Atonement, then, is the day when the blood of the first goat was sprinkled on the mercy seat in order to "cover" our sin. David said that a man was "blessed" when his sin was covered, because God then did not "take into account" his sin.
To impute, reckon, or account is a marvelous provision of God and is an important feature of the Law of Faith. By faith our sin is covered by the blood of Jesus that was shed on the cross.
Yet to really understand this concept, we must also understand that there was a second goat who job it was to remove sin. (See Lev. 16:20-22.) By seeing the contrasting works of the two goats, we understand the two comings of Christ. His first coming was as the first goat to cover our sin and impute righteousness to us, calling what is not as though it were. His second coming is as the second goat to remove sin from us and make us actually perfect.
Paul continues his discussion in verse 9,
9 Is this blessing, then, upon the circumcised [only], or upon the uncircumcised also? For we say, "Faith was reckoned to Abraham as righteousness." 10 How then was it reckoned? While he was circumcised, or uncircumcised? Not while circumcised, but while uncircumcised.
Abraham was circumcised in Gen. 17:24,
24 Now Abraham was ninety-nine years old when he was circumcised in the flesh of his foreskin.
But God imputed righteousness to him by faith many years earlier in Gen. 15:6 before he had any children. Since Ishmael was born when Abraham was just 86 (Gen. 16:16), the promise obviously came prior to that time. In fact, the context shows us that it was precisely because he had no children that he was concerned about the promises of God being fulfilled. He confided to God in Gen. 15:2 that he was childless, and the only heir at the time would have been Eliezar of Damascus, his steward.
God then told him to count the stars and said, "So shall your descendants be" (Gen. 15:5). That is what Abraham believed when God reckoned him righteous in verse 6. So Abraham was reckoned righteous long before his circumcision, Paul says:
11 and he received the sign [semeion] of circumcision, a seal of the righteousness of the faith which he had while uncircumcised, that he might be the father of all who believe without being circumcised, that righteousness might be reckoned to them, 12 and the father of circumcision to those who not only are of the circumcision, but who also follow in the steps of the faith of our father Abraham which he had while uncircumcised.
In other words, circumcision was a "sign," not the actual righteousness itself. It testified outwardly of an inner condition of faith. But, of course, many are circumcised (both Muslims and Jews) who do not have faith in the sacrificial work that Jesus Christ did on the cross. For such people, their faith is in their own works and their ability to submit to God fully. Their faith is based upon the Old Covenant, which cannot save them.
Circumcision is a testimony of an inward faith, but not all such people testify of their true inward condition. One must also "follow in the steps of the faith of our father Abraham" to have a valid outward testimony.