Internal vs. External Transformation
The issue at the heart of the Reformation was without a doubt the question of justification. When Luther was growing up, the understanding of justification that he was taught (and which really drove him to despair) was an understanding of justification inherited from Augustine who had thought that Romans 5:5 was the clearest single text to articulate justification. It says that “God has poured his love into our hearts by the Holy Spirit he’s given us.”
So with that understanding, God pours his love, by the Holy Spirit, into my heart so that in my heart, I am transformed to become more and more loving, more and more holy, more and more justified. It is an internal transformative process and that’s simply not what Romans 5:5 is actually about. But that understanding of justification as the transformative process meant that you could not be sure that you’d been internally transformed enough to be worthy of heaven.
And the answer to that question should normally, according to the Catholic Church be no. They would have said that most of us, bar a few exceptions, will spend a good time in Purgatory having remaining sins purged from us. What Luther saw as he turned to Romans chapter 1 was that justification is not an internal transformative process, it’s a declaratory act of God.
God declares by his word that a sinner, not on the basis of any internal transformation but by his own promise, is righteous as he is clothed with the righteousness of Christ. That meant that the sinner can be still a sinner in themselves and yet clothed with the righteousness of Christ— therefore confident before God in the face of death.
That was really the dividing line between a transformative understanding of justification and a declarative understanding of justification—one which has works as a cause of justification that contribute to justification, and one which has works as a consequence or an overflow of the transformation that happens when we find ourselves united with Christ and so clothed with his righteousness.