I was so impressed with this passage from Martin Luther's Commentary on Galatians explaining the difference between works and grace that I thought I'd like to update it and put it in more contemporary English. So here it is.
When we think of righteousness, we think of such things as obeying the laws of our government, following the rules taught by our parents and teachers, and keeping the Ten Commandments.
But there is a type of righteousness that is above all these; it is the righteousness of faith -- Christian righteousness. Not only is it different from these, it is completely opposite to them.
The first type of righteousness consists of our works (Let's call it "works-righteousness"), and may be accomplished by our own strength or by God's strength working in us. There is nothing wrong with works-righteousness. In fact, it is a gift of God.
But Christian righteousness is different; it is passive. We do no nothing to obtain it. We receive it from God by just allowing Him to do the work.
While both these types of righteousness, active works-righteousness and passive Christian-righteousness, are good, the Christian must strictly keep each one in its own territory.
Christian righteousness must rule the new man, the spiritual man, while the righteousness of the law must rule the old man, the flesh.
Think of the old man as an unruly donkey. Upon this donkey must be laid a burden of law that will press him down to keep him under control. This donkey, the flesh, must never enjoy the freedom of the Spirit or grace except as the new man, the spiritual man, rides upon him and keeps him under control.
In addition to the new man and old man, there are also two worlds involved here: the heavenly and the earthly. Just as the earthly and heavenly are two very different worlds, so they have two very different kinds of righteousness.
The righteousness of the law is earthly and by it we do good works. But no matter how well we keep it, it has no eternal value unless we first possess Christian righteousness, which is heavenly and passive. Again, we do not earn Christian righteousness; we simply receive it by faith from heaven.
Is there nothing we can do for this heavenly righteousness? No work at all?
I answer: Nothing at all. For the nature of this righteousness is to do nothing, to hear nothing, to know nothing whatsoever of the law or of works, but only to know and to believe this: that Christ has gone to the Father, that he is our high priest entreating for us and reigning over us in grace.
Watch out though! The devil will attack us by using the law to make us afraid, to afflict our consciences for past sins and remind us of the wrath and judgement of God. He will attempt to drive us to desperation and pull us away from Christ. He will even point out to us those places in the Gospels where Jesus himself requires works of us.
Therefore, understand clearly the difference between these two kinds of righteousness.
The righteousness of the law is good, but it must only be given dominion over the flesh. If it presumes to intrude upon your conscience, rebuke it like this:
"O law, you want to climb into my conscience and there reign and condemn me for my sins. You would take from me the joy of my heart which I have by faith in Christ. You would drive me to desperation and hopelessness.
"But you are exceeding your authority! Keep in your proper bounds and exercise your power on my flesh, but don't touch my conscience! For by the Gospel -- not by your power -- I am called to partake of the righteousness and eternal life given me by Jesus. You will not take the peace from my conscience, for in the righteousness Jesus provided there is no law, but forgiveness, peace, quietness, joy, health and everlasting life.
"You cruel and tyrannical tormentor; do not trouble me about these matters! I will not permit you to reign in my conscience, for it is the seat and temple of Christ the Son of God, who is the king of righteousness and peace, and my most sweet Savior and Mediator. He shall keep my conscience joyful and quiet in the pure doctrine of the Gospel and in the knowledge of this passive and heavenly righteousness."