The Lordship Salvation controversy in the 1990s happened quite some time ago. In that controversy, Pastor John MacArthur wrote a book The Gospel According to Jesus against the growing antinomianism in Dispensational Fundamentalism, notably against Dispensationalists like Charles Ryrie and Zane Hodges. MacArthur's target was the idea that a person can just have Jesus as Savior while denying Him as Lord. In other words, American revivalism, combined with a bastardized version of the doctrines of Assurance of salvation and of the Perseverance of the Saints in Dispensationalism, resulted in the production of a mangled doctrine often termed "Once Saved, Always Saved" (OSAS) or "Eternal Security." In this doctrine, once someone professed to have faith, as indicated by a tick in the response slip at a revival meeting or going up for an altar call, that person is saved for certain. In its most extreme version, OSAS teaches that a person after he prayed the Sinners' Prayer can apostatize later and even deny Christ, but he is still saved regardless of what he does afterwards, since he at ONE time in his life indicated faith in Christ. This "carnal Christian" however loses out on his reward, and, according to Charles Stanley, they will be in the "outer darkness" in the suburbs of heaven, a lesser hell situated within the vicinity of heaven itself.
This background is crucial to understand the context in which MacArthur was in when he wrote The Gospel According to Jesus. Some time later as the Lordship Salvation Controversy was still raging, a group of Reformed theologians like Dr. Michael Horton decided to write a response in the book Christ the Lord: The Reformation and Lordship Salvation. In that book, the Reformed theologians faulted both camps of the debate. The error of the non-Lordship camp was their reduction of faith to one of mere assent, while the fault of the Lordship camp was a subtle confusion of justification and sanctification. They acknowledged at that time that MacArthur did listen to some of their concerns.
In 2008, Zondervan put out a revised and expanded anniversary edition of MacArthur's book The Gospel According to Jesus. That book puts forwards his more advanced understanding of the issue, and corrected various errant phrases in his earlier editions. MacArthur it seemed has corrected whatever errors and loose phrases there were in the book when it was initially published, and it is this version that should be examined as to what MacArthur now believes to be the truth.
The question now is this: Does MacArthur still confuse justification and sanctification? I do not think so, and I will look at one section to show why this is the case. We must remember that we are to understand a person's position in the context in which he is writing it in, and not impute our meanings of what we thinks he says into his text, and thus misrepresent his position.
One section in which MacArthur deals with the demands of Christ is seen in his exposition of the rich young ruler in Matthew 19. He is accused of stating that the rich young ruler could earn salvation by actually doing good works. In the revised and expanded anniversary edition, here are some relevant excerpts in which MacArthur expounded the passage:
Many readers of Matthew 19 have taken the young man to task for his question. They say his mistake was in asking, "What good thing shall I do?" In other works, he has a works-oriented mind-set. And of course, it is true he was attuned to a religion based on works. He had been raise in a Pharisaic system of tradition. He was trained to think of religion as a system to earn divine favor. But with all that in his background, he asked a fair question. ...
After all, there is something we have to do to inherit eternal life: we have to believe. This man's question was not much different from the question of the multitudes in John 6:28: "What shall we do, that we may work the works of God?" Jesus answered these people with a simple and straightforward reply: "This is the work of God, that you believe in Him who He has sent" (v. 29).
But this is where the story takes an extraordinary turn. Jesus' answer to this young man seems preposterous: ...
Strictly speaking, Jesus' answer was correct. If a person could keep the law all his life and never violate a single jot or tittle, he would be perfect, sinless (cf. James 2:10). But no one except the Savior alone is like that; we are born in sin (Ps. 51:5). To suggest that the law is a means to eternal life clouds the issue of faith. ... (p. 94)
Finally, Jesus gave him the ultimate test: "If you wish to be complete, go and sell your possessions and give to the poor, and you shall have treasure in heaven; and come, follow Me" (Matt. 19:21). This challenged his claim to having kept the law. ...
The ultimate test was whether this man would obey the Lord. Jesus was not teaching salvation by philanthropy. He was not saying it is possible to buy eternal life with charity. ... The Lord was putting His finer on the very nerve of this man's existence. Knowing where his heart was, He said, "Unless I can be the highest authority in your life, there is no salvation for you." By placing Himself alongside the man's wealth and demanding that he made the choice, our Lord revealed the true state of the young man's heart.
The rich young ruler failed the rest. He was not willing to acknowledge Jesus as sovereign Lord over his life... It seems he really did want eternal life, but he was unwilling to come the way Jesus specified — the way of confessing his sin and surrendering to Jesus' lordship. In other words, he remained in unbelief. (pp. 97-8)
Salvation is by grace through faith (Eph. 2:8). This is the consistent and unambiguous teaching of Scripture. But people with genuine faith do not refuse to acknowledge their sinfulness. They sense that they have offended the holiness of God. They do not reject the lordship of Christ. They desire Him more than the things of this world. Real faith lacks none of these attributes. Saving faith does not recoil from the demand to forsake sin and self and follow Jesus Christ at all costs. Those who find His terms unacceptable cannot come at all. He will not barter away His right to be Lord.
If we learn anything from the account of the rich young ruler, it is the truth that although salvation is a blessed gift from God, Christ will not give it to one whose hands are filled with other things. Those who are not willing to turn from sin, possessions, false religion, or selfishness will find they cannot turn to Christ in faith. (p. 99)
When we look at the excerpts, we note here that MacArthur is not saying that people have to do something to be saved, or that the rich young ruler needs to do something to merit salvation. Rather, the request is to expose the failure of the rich young ruler to keep the Law, as he had claimed to do. That MacArthur is not teaching justification by faithfulness can be seen in the phrase he used that "our Lord revealed the true state of the young man's heart" (p. 98). Any work done in repentance is evidentiary of the state of the man's heart, not part of what contributes to their justification. That such is the correct interpretation is seen in the slightly later phrase that the rich young ruler "remained in unbelief" (p. 98).
Faith is normally described as consisting of cognition, assent and trust. Interpreting MacArthur's exposition using this three-fold description of faith shows us that MacArthur exposited the rich young ruler as not trusting in Christ. He did not trust in Christ, depicted by MacArthur as not "confessing his sins and surrendering to Jesus' lordship" (p. 98). It is not that the act of repentance or selling all he had will contribute to his justification, but rather that the failure to do that shows he has not the true faith that will evidence itself in works of repentance.
MacArthur probably did use language that confuses justification and sanctification in his earlier editions. The issue to be addressed now is whether he seems to have realized his mistakes in expression and made the necessary corrections, which he seems to have since there is nothing wrong with the exposition in this edition. This should make us see that MacArthur did not confuse justification and sanctification. Furthermore, the errors previously made were not intentional but a result of the polemics he was using against the Dispensational antinomians. That MacArthur responded positively and changed the questionable phrases shows us that any errors made were unintentional. Seeing the book in the context of the controversy it had both spawned and addressed, it should be clear that MacArthur did not confuse justification and sanctification in substance, and in his latest revised edition he also did not confuse justification and sanctification in form.