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Faith in Jesus is incompatible with partiality, because God is impartial. He certainly doesn't show partiality to the rich---something that is often done in human societies---and unfortunately by some in the early church as well. Keep in mind that the believers to whom James wrote had been driven from Jerusalem, and thus were financially disadvantaged refugees. If a rich man visited one of their gatherings, they would be tempted to favor him over a poor person, hoping to gain some benefit, and revealing "evil motives" (2:4). There should be, however, no distinctions made. The poor should be treated with the same consideration as the wealthy, following Jesus' example, who died for all. Moreover, as James points out, generally speaking, it is usually the rich who oppress people and blaspheme Christ's name. Why should such people be shown favor over the poor, whom God has chosen "to be rich in faith and heirs of the kingdom" (2:5), by Christ's people?
Two other items are worth noting in this first passage. First, to be classed among the rich, one only needed to have a set of fine clothing and a gold ring. One was classed among the poor if he had one set of dirty clothing. It is likely most everyone reading these words is in the rich category.
Second, the early church had no church buildings or meeting halls. For the most part, they gathered in homes. Note that the poor man was told by the host, "Sit down by my footstool" (2:3).
James was certainly not shy about quoting old covenant commandments---namely two of the Ten Commandments and one that Jesus said was the second greatest commandment---quoting them as if they were binding upon new covenant believers. James clearly believed that Jesus "did not come to abolish, but to fulfill" the Law and the Prophets, just as He had declared in His Sermon on the Mount (Matt. 5:17). Notice that James refers to the commandment to love your neighbor as yourself as the "royal law" and the "law of liberty," saying that the believer who fulfills it is "doing well" (2:8). According to James, we should live as people who will be judged by that law, a law that, incidentally, is mentioned once in the Old Testament and quoted seven times in the New Testament. With such endorsements, I wonder why it is not more often mentioned in Christian circles?
According to James, keeping that royal law involves showing mercy (2:12-13). If we fail to show mercy, we will receive no mercy at our judgment (2:13). This, again, is just what Jesus taught in His Sermon on the Mount: "Blessed are the merciful, for they shall receive mercy" (Matt. 5:7). Jesus also said that we will not be forgiven unless we forgive others (Matt. 6:14-15).
James has more to say about the poor beyond being impartial on their behalf. It is interesting that in his example of useless faith, he cites the person who does nothing to help a brother or sister who is without clothing or in need of daily food (2:14-17). This is certainly reminiscent of what Jesus taught about the future judgment of the sheep and goats (Matt. 25:31-46). James is quite dogmatic about it. Faith without works is dead, useless, and cannot save. Faith is always accompanied by works, as proven even by demons, who, believing in God, shudder.
It is amazing that a mantra of evangelical Christianity is, "We are justified by faith alone," when the only place in the entire Bible where the words faith and alone are found in the same verse is James 2:24: "You see that a man is justified by works and not by faith alone." Perhaps the mantra should be changed? Better to say, "We are justified by a living faith that works."
In regard to faith, works, and salvation, we are not saved by faith alone, because genuine faith is never alone, that is, void of works. If you have faith, you also have works. If you don't have works, you have no faith. Many pew-warmers are so inebriated with a false understanding of faith that their "assurance of salvation" is really just a "deception of salvation."