Revised 10/13/2010
Luther's spiritual state, and his spiritual evolution and ultimate conversion to new views of justification, are commonly separated from the doctrine itself in our understanding. This is because we approach the Scripture seeking the Scripturally objective sense of it, concerning this doctrine. It matters not what we or (or Luther) think, or what our spiritual state is. What matters is what the Scripture teaches.
But there needs to be a wrinkle here. Yes, it is true that the Scripture teaches "justification by faith alone." But, we need to consider how to use and apply this doctrine. We are helped toward this goal if we really do closely consider the relationship between Luther's spiritual turmoil and his "re-discovery" of this apostolic doctrine.
Luther originally accepted and labored under a doctrine of repentance which was usually stated like this: "To those who do what is in them, God will not deny grace." The question for Luther was whether or not he actually, honestly did "what was in him," that is, whether he ever did what he was really capable of doing for God. In the end, he thought not. All his works, he saw, were contaminated by sin. The result was that the "system" of repentance and Christian assurance broke down and failed. Now, if Luther isn't just out of his mind (an untenable position), then this means that Luther finally cared about the experiential truthfulness of this plan of salvation, and he found that the plan was a failure.
One might ask why other serious Christians did not discover this. It's a mystery. Perhaps they just did not put as much faith in that plan of repentance, or perhaps they did not worry about the sin which remained in their works. If they were serious Christians, they must have thought, just as Johann Staupitz, Luther's confessor said to Luther, that one must at some point just stop being angry at God and confessing sins all day, and trust in the God who grants grace. (This, of course, is implicitly to trust in justification by faith, while denying the doctrine). Luther, however, tested the medieval church doctrine to the bitter end and found it wanting. Because he strove for The Truth in this respect, he came to see The Truth on this point in the Scripture. Consequently, there was a Reformation, which was provoked in largest measure by this doctrine of free justification.
This is all highly instructive. We have to conclude then that justification by faith alone is only understood from the heart and relied upon by believers who truly see, mourn and hate their own ineradicable depravity. Only those who have despaired in their striving for sanctification can know the glory of free grace. Believers who have not reached the end of themselves cannot have heartfelt faith in Christ's free justification. For them, "Justification by Faith Alone" may be a battle cry of their religious party, but spiritually, it is just words. Such believers are open to false gospels. They are open to the use of legal methods for sanctification -- if they are interested in sanctification. Some may think in their hearts, "I'm justified, so I don't need to repent," thus implicitly denying their professed religion. Therefore, we must conclude that misbehavior by Christians, truly converted or not, is not a denial of the truthfulness or usefulness of the doctrine of justification by faith alone. When repentance comes alive, and sensitivity to sin constantly increases, and personal depravity becomes an ineradicable object of mourning and hatred in our souls, then salvation as a free gift (justification by faith alone) opens the doors of paradise to believers such as these. The joy and love imparted by this experience is truly sanctifying. It is spiritual deliverance. It is a power-relationship to the Spirit and to grace, instead of a power-relationship to law. It is the only truly sanctifying doctrine, and therefore is ultimately the doctrine of a standing or falling church. The whole Christian life is the continual re-discovery of free grace, as we struggle against our remaining depravity and sin.
How should we ever think, then, that "Justification by Faith Alone" is simply an easily accepted initial doctrine of the faith, and that once this "believing" is done and we are justified, then, as a separate activity, we take up the serious business of "working on our sanctification." It is only in the midst of the struggle of sanctification that the inbreaking of the divine peace continually delivers us! In the end, in the day of final deliverance, the free justification and unmerited reward of God will be all there is, in glory, forever and ever.