One thing that must be taken into consideration in the interpretation of James 2: 14-26 is that the Scriptures cannot contradict themselves. Therefore Romans 4:2 must be considered.
For if Abraham was justified by works, he has something to boast about, but not before
God. Romans 4:2 (NASB)
At first glance this would appear to contradict James who says:
Was not Abraham our father justified by works when he offered up Isaac his son on the altar?
James 2:21.
How can Paul say that Abraham was not justified by works and James then say Abraham was justified by works?
First, it must be recognized that Protestants generally give justification a different meaning than Catholics. To Protestants justify mean to “declare righteous”, not “make righteous”. You may not agree with this distinction but you did ask for a Protestant interpretation.
So Paul says that Abraham was not declared righteous by works and James says he was declared righteous by works.
But what else does Paul say? He says that Abraham was not justified by works before God. James does not say before God. In fact, the context in James is “How can we tell that someone who says they have faith actually has faith?”.
James says “What use is it, my brethern, **if someone says he has has faith **but has no works?” He also says “But someone may well say, “You have faith and I have works; **show me your faith **without the works, and **I will show you my faith **by my works.””
What James is talking about is not how someone is declared righteous before God, but how someone is declared righteous before men. Works is the evidence of faith, which is why Protestants say “faith alone but not faith that is alone”. We agree that works are necessary in that they will be the inevitable result of faith. However, those works do not merit anything.
That James is talking about showing our faith to men is made clear by the example he uses with Abraham. He uses Abraham’s willingness to sacrifice Isaac as the work that justified him. That is Genesis 22. However, that is after Abraham had already been already been reckoned righteous in Genesis 15:6. So Abraham was justified before God prior to his being justified in the eyes of men when he was willing to sacrifice Issac.
When James says “You believe that God is one You do well; the demons also believe, and shudder.” He is not talking about a real living faith. What he is talking about is a bare agreement with a fact. But saving faith is more than intellectual consent.
Now faith is the assurance of things hoped for, the conviction of )things not seen.
Hebrews 11:1 (NASB)
The demons do not hope in Christ which makes true faith differenent form mere assent to the truth of something.