Covenant and Dispensational theology agree that Scripture is progressive. Where dispensational theology saw a discontinuity between the various dispensations (and in particular between the Old and the New Testaments), covenant theology sees a great deal of continuity.
1. COVENANT THEOLOGY
Covenant Theology remains the majority report for Protestantism since the time of the Reformation, and it is the system favored by those of a more Reformed or Calvinistic persuasion.
Covenant Theology defines two overriding covenants: the covenant of works (CW) and the covenant of grace (CG). A third covenant is sometimes mentioned; namely, the covenant of redemption (CR). All of the various covenants described in Scripture (e.g., the covenants made with Noah, Abraham, Moses, David and the New Covenant) are as a result of either the covenant of works or the covenant of grace.
1a) COVENANT OF REDEMPTION:
The covenant of redemption logically precedes the other two covenants. It is a covenant made among the three Persons of the Trinity to elect, atone for, and save a select group of individuals unto salvation and eternal life. “The Father chooses a bride for His Son.” Jesus often referred to His task as carrying out the Father’s will (John 5:3, 43; 6:38-40; 17:4-12). That fact that the salvation of the elect was God’s intention from the very beginning of creation cannot be doubted.
1b) COVENANT OF WORKS:
The Old Covenant is more than just the moral law codified in the Ten Commandments. The Old Covenant includes the rules and regulations regarding the worship of God as well as the civil law that governed the nation of Israel. With the coming of Jesus Christ, the promised Messiah of the OT, many aspects of the Old Covenant become obsolete because Jesus fulfilled the Old Covenant types and figures (again, see Hebrews 8–10). The Old Covenant represented the “types and shadows,” whereas Christ represents the “substance” (Colossians 2:17).
Adam:
From a redemptive historical perspective, the covenant of works is the first covenant. When God created man, He gave him one simple command: “… you must not eat from the tree of the knowledge of good and evil, for when you eat of it you will surely die” (Genesis 2:16-17). Life is the reward for obedience, and death is the punishment for disobedience.
Moses / Israel:
We see a similar structure in the giving of the Old Covenant through Moses to Israel. Israel made a covenant with God at Sinai. God would give the Promised Land and His blessing and protection against all enemies in return for Israel’s obedience to the stipulations of the covenant. The punishment for covenant violation was expulsion from the land (which occurred in the conquest of the Northern Kingdom in 722 B.C. and the Southern Kingdom in 586 B.C.).
1c. COVENANT OF GRACE:
When Adam failed in keeping the covenant of works, God instituted the covenant of grace. God freely offers to sinners eternal life and salvation through faith in Jesus Christ. We see the provision for the CG right after the fall when God prophesies the “seed of the woman” in Genesis 3:15. Whereas the covenant of works is conditional and promises blessing for obedience and cursing for disobedience, the covenant of grace is unconditional and is given freely on the basis of God’s grace. The Bible also clearly teaches that even saving faith is a gracious gift from God (Ephesians 2:8-9).
Abraham:
We see the covenant of grace manifested in the various unconditional covenants God makes with individuals in the Bible. The covenant God makes with Abraham (to be his God and for Abraham and his descendants to be His people) is an extension thereof.
David:
The Davidic Covenant (that a descendant of David will always reign as king) is also an extension of the CG. God writes His law upon our hearts and completely forgives our sins. The various OT covenants all find their fulfilment in Jesus Christ. The promise to Abraham to bless all the nations and the Davidic king who will eternally rule over God’s people were fulfilled in Christ. The New Covenant was obviously fulfilled in Christ.
The CG does not abrogate the covenant of works as codified in the moral law. God demanded holiness from His people in the OT (Leviticus 11:44) and still demands holiness from His people in the NT (1 Peter 1:16). Romans 5:12-21 describes the situation between the two federal heads of the human race. Adam represented the human race in the Garden and failed to uphold the CW. Jesus Christ stood as man’s representative and perfectly fulfilled the CW. That is why Paul can say, “As in Adam all die, so also in Christ shall all be made alive” (1 Corinthians 15:22).
Replacement Theology or not?:
In conclusion, Covenant Theology sees the OT as the promise of Christ and the NT as the fulfillment in Christ. Some have accused Covenant Theology as teaching what is called “Replacement Theology” (i.e., the Church replaces Israel). This couldn’t be further from the truth. Unlike Dispensationalism, Covenant Theology does not see a sharp distinction between Israel and the Church. Israel constituted the people of the God in the OT, and the Church (which is made up of Jew and Gentile) constitutes the people of God in the NT; both just make up one people of God (Ephesians 2:11-20). The Church doesn’t replace Israel; the Church is Israel and Israel is the Church (Galatians 6:16).
Baptism:
Baptism is considered by Covenant Theologians as the visible sign of entrance into the New Covenant and therefore may be administered individually to new believers making a public profession of faith, corporately to the households of believers which typically would include children, or individually to children or infants of believing parents (Infant baptism). Baptism is thus seen as the functional replacement and sacramental equivalent of the Abrahamic rite of circumcision and symbolizes the internal cleansing from sin, among other things.
Interpretation of the Bible:
It requires an allegorical interpretation of many Scripture passages, including prophecy that relates to God’s future plans for Israel. Allegorical interpretation is an interpretive method (exegesis) which assumes that the Bible has various levels of meaning and tends to focus on the spiritual sense (which includes the allegorical sense, the moral sense, and the anagogical sense) as opposed to the literal sense.
Approach to end time Bible prophecy:
Most Reformed thinkers do not believe that the reference to a 1000-year reign of Christ should be taken as a future event (Rev. 20:1-5). They regard this section of Revelation as a symbolic “recapitulation” of Christian church history, with Satan spiritually “bound” through Christ’s resurrection. Although this view is often called a-millennialism, this is not quite accurate. The prefix “a” means “no”. Covenant writers do believe in a Millennium; but they define it non-physically and non-futuristically. Most Covenant thinkers accept the general idea of a final period of extreme apostasy and divine wrath just prior to Christ’s return.
There has recently been a resurgence of post-millennialism in Reformed circles as well. This is the belief that all the glorious O.T. predictions of a Golden Age for Israel will be fulfilled through the Christian Church prior to Christ’s return.
Reformed writers believe that the translation of the saints into glory, the resurrection of the just, (1 Thess. 4:13-18), the return of Christ (Rev. 19:11-16), and the Great White Throne Judgment (Rev. 20:11-15) all happen at the same time. (sequentially) I.e., they disagree with the teaching that the Rapture of the Church happens prior to the final tribulation. Most would teach that the Rapture happens at the end of the great tribulation (post-tribulationalism). Christ’s return ushers in the final regeneration of the cosmos, with no intervening millennium.
2. DISPENSATIONAL THEOLOGY
In theology, a dispensation is the divine administration of a period of time and each dispensation is a divinely appointed age. Dispensationalism recognizes these ages ordained by God to order the affairs of the world.
Dispensationalism has two primary distinctives:
1) a consistently literal interpretation of Scripture, especially Bible prophecy, and
2) a view of the uniqueness of Israel as separate from the Church in God’s program. Classical dispensationalism identifies seven dispensations in God’s plan for humanity.
Literal interpretation of the Bible:
The literal interpretation gives each word the meaning it would commonly have in everyday usage. Allowances are made for symbols, figures of speech, and types, of course. The latter have literal meanings behind them.
Dispensationalists understand the Bible to be organized into seven dispensations: Innocence (Genesis 1:1—3:7), Conscience (Genesis 3:8—8:22), Human Government (Genesis 9:1—11:32), Promise (Genesis 12:1—Exodus 19:25), Law (Exodus 20:1—Acts 2:4), Grace (Acts 2:4—Revelation 20:3), and the Millennial Kingdom (Revelation 20:4–6). These dispensations are not paths to salvation, but manners in which God relates to man. Each dispensation includes a recognizable pattern of how God worked with people living in the dispensation. That pattern is 1) a responsibility, 2) a failure, 3) a judgment, and 4) grace to move on.
Dispensational theology views the revelation as progressive, i.e., in each dispensation, God reveals more and more of His divine plan of redemption. And each dispensation is typically introduced with some new revelation from God.
Fulfilment of prophecies:
Every prophecy about Jesus Christ in the Old Testament was fulfilled literally. If a literal interpretation is not used in studying the Scriptures, there is no objective standard by which to understand the Bible. Each person would be able to interpret the Bible as he saw fit.
So, for example, when the Bible speaks of “a thousand years” in Revelation 20, dispensationalists interpret it as a literal period of 1,000 years (the dispensation of the Kingdom), since there is no compelling reason to interpret it otherwise.
Dispensationalism, as a system, results in a premillennial interpretation of Christ’s second coming and usually a pretribulational interpretation of the rapture.
Two distinct people – Israel and the Church:
Dispensationalists believe that salvation has always been by grace through faith alone—in God in the Old Testament and specifically in God the Son in the New Testament. Dispensationalists hold that the Church has not replaced Israel in God’s program and that the Old Testament promises to Israel have not been transferred to the Church. The promises God made to Israel in the Old Testament (for land, many descendants, and blessings) will be ultimately fulfilled in the 1000-year period spoken of in Revelation 20. Dispensationalists believe that, just as God is in this age focusing His attention on the Church, He will again in the future focus His attention on Israel (see Romans 9–11 and Daniel 9:24). Until then is the Church Age—the time of the Gentiles.
3. NEW COVENANT THEOLOGY
It stands as a bridge between dispensational theology and covenant theology. It has not intentionally set itself up between dispensational theology and covenant theology, but it shares things in common with both.
It shares a lot in common with classic covenant theology, in particular the continuity between the Church and Israel as being one people of God. However, it also differs from covenant theology in that it does not necessarily view the Scriptures as the unfolding of redemption in a covenant of works/covenant of grace framework. Instead, it sees the Scriptures in a more promise/fulfillment paradigm.
Mosaic law:
By far the biggest difference between new covenant theology and covenant theology is how each views the Mosaic Law. Covenant theology sees the Law in three ways: civil, ceremonial and moral. The new covenant theologians agree with the Jews who did not delineate between civil, ceremonial and moral laws.
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According to classic covenant theology, Jesus came to fulfill the Law (Matthew 5:17). He did so by satisfying all of the ceremonial, civil and moral aspects of the Law. Jesus Christ is the reality behind the shadows of the Old Testament sacrificial system and thereby fulfills the ceremonial aspect of the Law. Jesus Christ also bore the penalty our sins deserved and thereby fulfilled the civil aspect of the Law. Finally, Jesus Christ lived in full accordance with the moral aspect of the Law and fulfilled the righteous requirements of the Law.
However, moral aspect of the Law (especially the Ten Commandments) still stands as the standard of morality for mankind because it is reflective of God’s character, and that does not change.
Because new covenant theology sees the Mosaic Law as a whole, it also sees the moral aspect of the Mosaic Law as fulfilled in Christ and no longer applying to Christians. Instead of being under the moral aspect of the Mosaic Law as summarized in the Ten Commandments, we are under the law of Christ (1 Corinthians 9:21). The law of Christ would be those prescriptions that Christ specifically stated in the Gospels (e.g., the Sermon on the Mount). The old covenant is obsolete (including the moral aspect of the Mosaic Law) and replaced by the new covenant with the law of Christ to govern its morality.
HEAVENLY REMNANT MINISTRIES 
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