I'll make less comments myself in this post, and mostly let Luther speak, because this was a "mountain top" passage for him in his fight against the error of his day (which sadly continues down to the present). And I must allow him to speak not only generally to the false teaching of justification by faith and works, but also to the specific religious system that was teaching it. And unfortunately this still needs to be said in our current age, because the Roman Catholic Church condemned the Pauline and Lutheran doctrine of justification by faith alone at the Council of Trent in the 16th Century, and has never changed its position since then.
In his commentary on Galatians Luther had no choice but to apply Paul's teaching to the Catholic Church, because it was dominating the religious and cultural landscape of his day, and because it had recently condemned him as a heretic, placing his life in serious danger. But as you read the quotes, notice how he also applies the truth of the passage in a way that all souls, whether Catholic or Protestant, ancient or modern, can benefit from it. In our personal lives we all tend to make the mistakes that have been made institutionally, like missing the distinction between faith and works, confusing justification and sanctification, and allowing our sins and failures to steal our joy or immobilize us when we should be walking in the freedom and power of God's grace.
So let's listen to some of the verbal "thunderbolts" of the great Reformer on the topic that many say he understood better than any other (justification by faith alone). In this first quote he answers interesting questions like "Were there no true believers in the Medieval church?" and "Why did it fall into such disrepair?" These comments are on verse 16, "For by the works of the law shall no flesh be justified"...
The papists do not believe this. They say, "A person who performs this good deed or that, deserves the forgiveness of his sins. A person who joins this or that holy order, has the promise of everlasting life." To me it is a miracle that the Church, so long surrounded surrounded by vicious sects, has been able to survive at all. God must have been able to call a few who in their failure to discover any good in themselves to cite against the wrath and judgment of God, simply took to the suffering and death of Christ, and were saved by this simple faith. Nevertheless God has punished the contempt of the Gospel and of Christ on the part of the papists, by turning them over to a reprobate state of mind in which they reject the Gospel, and receive with gusto the abominable rules, ordinances, and traditions of men in preference to the Word of God, until they went so far as to forbid marriage. God punished them justly, because they blasphemed the only Son of God.
Soon after Luther gets more personal and universal in his application:
The conscience knows how impossible it is for a person to fulfill the Law. Why, the Law makes trouble even for those who have the Holy Spirit. What will not the Law do in the case of the wicked who do not even have the Holy Spirit? The Law requires perfect obedience. It condemns all do not accomplish the will of God. But show me a person who is able to render perfect obedience. The Law cannot justify. It can only condemn according to the passage: "Cursed is every one that continueth not in all things which are written in the book of the law to do them."
And then he combines his theological criticism of Catholicism with his pastoral concerns for the needs of people, and provides this extended discussion that includes a practical example of how comfort is given to someone facing death (which applies to all of us, of course)...
By the grace of God we know that we are justified through faith in Christ alone. We do not mingle law and grace, faith and works. We keep them far apart. Let every true Christian mark the distinction between law and grace, and mark it well.
We must not drag good works into the article of justification as the monks do who maintain that not only good works, but also the punishment which evildoers suffer for their wicked deeds, deserve everlasting life. When a criminal is brought to the place of execution, the monks try to comfort him in this manner: "You want to die willingly and patiently, and then you will merit remission of your sins and eternal life." What cruelty is this, that a wretched thief, murderer, robber should be so miserably misguided in his extreme distress, that at the very point of death he should be denied the sweet promises of Christ, and directed to hope for pardon of his sins in the willingness and patience with which he is about to suffer death for his crimes? The monks are showing him the paved way to hell.
These hypocrites do not know the first thing about grace, the Gospel, or Christ. They retain the appearance and the name of the Gospel and of Christ for a decoy only. In their confessional writings faith or the merit of Christ are never mentioned. In their writings they play up the merits of man, as can readily be seen from the following form of absolution used among the monks.
"God forgive thee, brother. The merit of the passion of our Lord Jesus Christ, and of the blessed Saint Mary, always a virgin, and of all the saints; the merit of thy order, the strictness of thy religion, the humility of thy profession, the contrition of thy heart, the good works thou hast done and shalt do for the love of our Lord Jesus Christ, be available unto thee for the remission of thy sins, the increase of thy worth and grace, and the reward of everlasting life. Amen."
True, the merit of Christ is mentioned in this formula of absolution. But if you look closer you will notice that Christ's merit is belittled, while monkish merits are aggrandized. They confess Christ with their lips, and at the same time deny His power to save. I myself was at one time entangled in this error. I thought Christ was a judge and had to be pacified by a strict adherence to the rules of my order. But now I give thanks unto God, the Father of all mercies, who has called me out of darkness into the light of His glorious Gospel, and has granted unto me the saving knowledge of Christ Jesus, my Lord.
We conclude with Paul, that we are justified by faith in Christ, without the Law. Once a person has been justified by Christ, he will not be unproductive of good, but as a good tree he will bring forth good fruit. A believer has the Holy Spirit, and the Holy Spirit will not permit a person to remain idle, but will put him to work and stir him up to the love of God, to patient suffering in affliction, to prayer, thanksgiving, to the habit of charity towards all men.
Notice Luther's emphasis in the last paragraph on the importance of good works in the life of the Christian, and even their role in proving the genuineness of faith. (As Luther was known to say, "Faith alone saves, but the faith that saves is never alone.") This and the many other similar references in his Galatians commentary put the lie to the idea that he had too little concern for obedience to the law of God. No, he just wanted our good works to be put in their proper place, as an effect of our justification rather than a cause for it.