Lee Irons posted some wonderful excerpts from 19th-century Scottish minister John Colquhoun’s "A Treatise on the Law and the Gospel."
His first quote from pp. 55-56 presents an excellent summary of covenant theology:
The violated covenant of works [in Adam]… was not, and could not be, made or renewed with the Israelites at Sinai; for it was a broken covenant, and besides, it was a covenant between God and man as friends, whereas now man has become the enemy of God. But though it was not renewed with them, yet it was, on that solemn occasion, repeated and displayed to them. It was not proposed to them in order that they might consent, by their own works, to fulfill the condition of it; but it was displayed before them in subservience to the covenant of grace that they might see how impossible it was for them as condemned sinners to perform that perfect obedience which is the immutable condition of life in it… that by means of it, finding themselves utterly destitute of perfect righteousness, they might be impelled to take hold of the covenant of grace in which the perfect righteousness of the second Adam is provided and exhibited for the justification of all who believe.
I have more reading to do on this matter, but this almost sounds compatible with N.T. Wright’s interpretations of Pauline justification. (Although I don’t mean to imply that’s what Irons is necessarily getting at, as he’s an elder in the PCA, and those guys really don’t like Wright.)
Since Luther, Protestants have often read Paul’s argument against justification by works in the context of Johann Tetzel’s Catholic indulgences. Wright says,
The only notice that most mainstream theology has taken of this context is to assume that the Jews were guilty of the kind of works-righteousness of which theologians from Augustine to Calvin and beyond have criticised their opponents…
Like modern-day evangicals, they read their current situations into the text instead of trying to understand the original context in which it was written.
Basically, Wright’s hypothesis is that the Jews would have understood Colquhoun’s conclusions about the Abrahamic covenant of grace vs. the Mosaic republication of the covenant of works at Sinai, and that they would have relied on God to "provide the Lamb" just as Abraham did (Genesis 22:8).
There were laws in the Torah which were not directly related to the moral law summarized in the Ten Commandments, but which served to separate the Hebrews from the pagan cultures around them and distinguish them as the "peculiar people" of God. In Wright’s reading, the ceremonial laws were obeyed as signs of the covenant community, as a source of ethnic pride. But in the New Covenant, the "boundaries" of the people of God are expanded as the Big Tent is spread out to include the Gentiles, and the "justification" of these boundaries is now faith, not works. In Wright, Paul’s condemnation of the Judiazers is not that they sought salvation by works, but that they "established their own righteousness" by keeping circumcision and dietary restrictions (marks of the Old Covenant) to keep themselves segregated from the Gentile Christians and maintain a sense of Jewish exceptionalism, which bothered Paul because it represented the same hateful zealotry he used to carry prior to conversion.
Mark Mattison writes in his summary of Wright’s perspective:
Wright explodes the myth that the pre-Christian Saul was a pious, proto-Pelagian moralist seeking to earn his individual passage into heaven. Wright capitalizes on Paul’s autobiographical confessions to paint rather a picture of a zealous Jewish nationalist whose driving concern was to cleanse Israel of Gentiles as well as Jews who had lax attitudes toward the Torah. Running the risk of anachronism, Wright points to a contemporary version of the pre-Christian Saul: Yigal Amir, the zealous Torah-loyal Jew who assassinated Prime Minister Yitzhak Rabin for exchanging Israel’s land for peace.
The whole idea of covenant theology is that the plan of salvation has been the same since the beginning, that the faith of the Christian is the faith of Abraham. The question I think Colquhoun is asking about Old Testament Jews and Wright is asking about the Judaizers is whether they might have understood the place of Law and Gospel all along, as opposed to what many modern Christians might assume, that the Gospel was somehow veiled for a thousand years between Moses and Christ while everyone was left to pull themselves up by their own bootstraps.