In 1977, E.P. Sanders published Paul and Palestinian Judaism, which agreed with the central thesis of Stendhal and developed it through looking at sources from second temple Judaism. In this volume, Sanders briefly overviews the different evaluations of second temple Judaism which scholars have promoted in the recent past. In the 19th century, due to the work of F. Weber, it was generally understood that Judaism of the second temple period was a religion of "works righteousness." Jews supposedly believed that God would weigh one's good deeds against his bad to determine the fate of that man. One could gain extra merit through a "treasury of merits" of sorts. Sanders concludes that Weber's evaluation was deeply flawed, though remained somewhat unchallenged in his day. This same view of Judaism was promoted by Bousset, Schurer, and Bultmann. Many Jewish scholars refuted Weber's claims, and Sanders believes successfully, yet their work was not of much effect. Weber's view still was the majority opinion.
Sanders attempts to prove that Weber's view is flawed by evaluating the writings of the second temple period extensively. According to Sanders, there was an overall coherence of a "pattern of religion" in Judaism. “A pattern of religion does not include every theological proposition or every religious concept within a religion. The term ‘pattern’ points toward the question of how one moves from the logical starting point to the logical conclusion of the religion.” (Paul and Palestinian Judaism pg. 17) This can be loosely placed under the rubric of soteriology. Though there were certainly diverging views of Judaism in the second temple period, there was an overall basic soteriology which permeated the majority of second temple literature. Sanders labels this soteriology "covenantal nomism." Covenantal nomism is the idea that the Jews believed themselves to be in the covenant by grace, but maintained their status in the covenant by obedience. In other words, the emphasis was on God's electing grace rather than on strict law-keeping. God chose the nation of Israel to be His own, thus one was in the covenant by God's choice, not by works. The role of law-keeping was one of maintaining status, rather than gaining status. One could lose "salvation" by breaking the commandments, yet one could not gain "salvation" by keeping commandments.
The question naturally comes as to why God elected the nation of Israel. Sanders posits that there were three different answers to this question in second temple literature. One answer was that the covenant was offered to all nations, yet Israel was the only one to accept it. The second opinion was that the nation was chosen because of the merits of the patriarchs. The third was that God elected the nation simply because he chose to; it was a matter of pure grace. The first two answers still put the covenant in the hands of human merit, yet Sanders does not see this as harmful to his thesis. It does not matter how or why the covenant was initiated in the first place. What matters is that those in the covenant in the second temple period were personally initiated apart from what they had done.
In the second part of this book, Sanders evaluates the theology of Paul in light of the pattern he has uncovered in Second Temple literature. Sanders works from the epistles of Paul which he sees as undisputed. These include: Romans, Galatians, 1 and 2 Corinthians, Philemon, Philippians, and 1 Thessalonians. In Sander's view, Paul argued from solution to plight. Paul saw Christ as the solution, thus realizing that there must be a problem that man needs to be saved from. First came his conviction of redemption in Christ and then came his view of the law. “Paul’s logic seems to run like this: in Christ God has acted to save the world; therefore the world is in need of salvation; but God also gave the law; if Christ is given for salvation, it must follow that the law must not have been.” (pg 475) Agreeing with Stendhal, Sanders observes that in his description of himself in Philippians 3, Paul calls himself "blameless." Under the law he did not have a deep inward struggle with sin. When Paul preached, he most likely did this the same way. The content of his preaching was not the conviction of sins and then redemption in Christ, but instead began with the message of salvation through Christ.
Salvation in Paul is predominantly seen as a future event which he mistakenly thought to be soon. “It is further to be observed that the verb “save” in Paul is generally future or present but only once past (aorist) tense.” (pg 449) Sanders sees Paul's motifs of salvation as more participationist than juristic. The reformation overemphasized the judicial categories of forgiveness and escape from condemnation, while ignoring the real heart of salvation, which is a mystical participation in Christ. Paul shows this in his argument in his first epistle to the Corinthians when arguing against sexual immorality. It is wrong because it affects one's union with Christ by uniting himself to a prostitute. Sin is not merely the violation of an abstract law. This participationist language is also used in Corinthians in the discussion of the Lord's Supper wherein one participates in the body and blood of Christ.
Unlike many later proponents of the New Perspective, Sanders sees justification as transfer language. It describes one’s entrance into the people of God. However, this is not so much about one's legal status. Paul indeed adopted the earlier Christian view that Christ's death was expiatory and that man was forgiven of his sins. However, when Paul uses this language he is only expressing accepted Christian tradition, not his own point of view. Paul's own thought emphasizes the death of Christ as delivering us from the old aeon and bringing us into the new. His death involves a changing of Lordship and causes us to die not to the penalty of sin, but to the power of sin. “Christ came to provide a new Lordship for those who participate in his death and resurrection.” (pg 499)
For Sanders, Paul did not see the law as something which was impossible to fulfill. As previously mentioned, he said himself that he was blameless under the law. The problem with the law was not that it did not offer righteousness, but that it offered the wrong kind of righteousness. Paul came to the realization that man must be righteous by faith in Christ, thus all other righteousness is excluded, meaning it cannot come by the law. He saw the problem that both Jews and Gentiles were to be “righteoused” by faith, purporting that law could not make one righteous, since it excluded gentiles.
Paul believed, as is evident in Romans 6, that men are under the Lordship of sin. He did not come to this conclusion by any inner struggle, rather by the fact of the lordship of Christ. Since to be saved one must come under the lordship of Christ, he must have previously been under the lordship of something else; that something else is sin. This takes him so far as to overemphasize man's sinfulness in Romans 7 which almost equates the law itself with sin.
Does Paul accept the covenantal nomism pattern which he had received as a Pharisee? Sanders says in some sense yes, and in some ways no. In many ways, his categories were much different. For example, he discusses the new exodus, not in covenantal categories, but instead as the escape from one aeon to another. Paul does accept the basic idea that in the new covenant there is salvation, and those outside of the covenant will not receive salvation. One enters into the new covenant by baptism, through grace, and must keep with repentance to stay within the covenant. This is seen as he often talks about justification by grace in the past tense, but in Romans 2 is able to speak of a future justification by works. However, he differs in his description of personal transgression. Transgression for Paul is not seen as something which will exclude one from the covenant, but as something which affects one's mystical union with Christ. While Paul does sometimes speak in covenantal language, the covenantal nomism category does not fit his emphasis on the new creation. Essentially, while Paul accepts some aspects of Jewish soteriology, it is inconsistent with his participationist categories, “the primary reason for which it is inadequate to depict Paul’s religion as a new covenantal nomism is that the term does not take account of his participationist transfer terms, which are most significant terms for understanding his soteriology.” (pg. 514)