I’m convinced that we don’t really have a conflict here. What James is saying is this: If a person says he has faith, but he gives no outward evidence of that faith through righteous works, his faith will not justify him. Martin Luther, John Calvin, or John Knox would absolutely agree with James. We are not saved by a profession of faith or by a claim to faith. That faith has to be genuine before the merit of Christ will be imputed to anybody. You can’t just say you have faith. True faith will absolutely and necessarily yield the fruits of obedience and the works of righteousness. Luther was saying that those works don’t add to that person’s justification at the judgment seat of God. But they do justify his claim to faith before the eyes of man. James is saying, not that a man is justified before God by his works, but that his claim to faith is shown to be genuine as he demonstrates the evidence of that claim of faith through his works.
—R. C. Sproul, “Does James 2:24 Deny Justification by Faith Alone?” (HT: Aquila Report)
So this follows? “Not everyone who says to me, ‘Lord, Lord,’ will enter the kingdom of heaven, but the one who does the will of my Father who is in heaven. On that day many will say to me, ‘Lord, Lord, did we not prophesy in your name, and cast out demons in your name, and do many mighty works in your name?’ And then will I declare to them, ‘I never knew you; depart from me, you workers of lawlessness.’” Doing works in order to prove faith being not the same as doing works as a result of faith. Right?
“But they do justify his claim to faith before the eyes of man” – I don’t think Sproul is saying quite enough here. It isn’t just before the eyes of man that a person’s claim to faith is justified (“justify” is being used in a slightly different sense here from the way Paul uses it), but those of angels, devils, and God Himself. “Now I know that thou fearest God” said the Angel of the Lord in Genesis 22:12. God desires evidence of faith to bring forth on the day of judgement, and by His grace provides it.
It is noteworthy that neither of the specific works of faith of history that James pinpoints were linked to any sort of revealed law, rather, they demonstrated that the actors really believed God, sufficiently to act on their beliefs. Which is meant to demonstrate that although under the New Testament works of faith are always acts of obedience to the moral law, it isn’t the law that is the basis of these works, but belief on God, and as such they are always required from, and produced by the grace of God from true believers.