Covenant Theology is a hermaneutic that describes God's relationship with man through covenants. This system proposes that God had an original covenant with Adam, the covenant of the law, whereby Adam would obey God and would eventually be granted eternal life. Adam broke that covenant and so God adopted a new Covenant of Grace.
Every moment in history since the fall of Adam has been under this new covenant of grace. From time to time, however, God has expanded on the terms of the covenant of grace, administering the covenant in slightly different and more detailed terms. So the Noaic covenant, the Mosaic covenant, the Abrahamic covenant, David, etc, are all part of the general covenant of Grace. But each "administration" of the covenant gives a better and more complete understanding of what this covenant of grace actually is.
In the New Testament, Jesus re-affirms the covenant of Grace with his earthly mission. The implication of this approach is that there is no distinction between Israel and the Church, so that Adam was in the church, and Abraham was in the church. Therefore all the laws and interpretations of the law that were found in the Old Testament carry forward on to the burden of the New Testament church as well. The signs are the same, so there is a feeling that circumcision and baptism are the same, serve the same function. The law of Moses is the eternal, universal law binding everyone. The ten commandments is God's universal law for all time. Jesus can't change the law, the apostles didn't change the law. We're all under the ten commandments, but also under the general Levitical precepts as well.
New Covenant Theology
This system says that there was a fundamentally new covenant created between God and his people during Jesus' ministry. The old covenant was fulfilled and replaced by the new covenant.
In fact, they would assert that the Covenant of Grace is nowhere found in the Bible in term or in concept. It is a wholly constructed philosophy. There is one unifying theme throughout the Bible; that Theme is Christ.
On the other hand, the actions of Jesus and the teachings of his apostles overtly established a new covenant, and they did so intentionally, fully aware of what they were doing.
They would acknowledge distinct relationships between God and his people. The Noahic covenant is not the Mosaic covenant, nor the Davidic covenant. They are all distinct covenants prophesying and looking toward the New covenant which Jesus would come and establish.
This allows them to see distinctions between the Church and Israel. The nation of Israel was the covenant people of the Old Testament. The Church is the new covenant people of God. The New Testament teaches that God does new things in this new covenant. For example, the pouring out of the Holy Spirit at Pentecost is a new aspect of the relationship with God. It was not the same thing that was happening with the Spirit in the Old Testament. Worship is not the same between the Old and New covenants, the Signs are not the same.
In the new covenant, you have to have faith. In the old covenant, all you had to do was be born to a Jewish family and be circumcised. The biggest difference is that the old covenant was under the law of the Ten Commandments. In the new covenant, we are under the law of Christ. We believe that the teaching of Jesus and his Apostles contain the commandments that we as Christians are required to obey.
Dispensationalism
This approach says that history is divided into distinct methods which God used to interact with his people. A dispensation is a way of ordering things, an administration or a management. Each of these distinct methods, or Dispensations, defines an divinely appointed age. Dispensationalism recognizes seven Ages. Further, there are two distinct peoples, the nation of Israel and the Church. However, the Church has not replaced Israel in Gods plan for the world and that the promises made to Israel have not been nullified. God's working through Israel and through the Church are in parallel. God's promises have not been transferred to the Church, but instead the Church has received their own promises.
Dispensationalism emphasizes a literal interpretation of the Bible.
the Bible has been organized into seven dispensations;
Innocence: before the fall of Adam
Conscience: Adam to Noah. Adam claimed that he could determine between good and evil with as much success as God. Instead, mankind became increasingly wicked until God decided to destroy the world and save only Noah.
Human government: Noah to Babel. After the Flood, man tried to group together into societies and nation states that would collectively determine good and evil. The result was excessive human hubris that determined they would attempt to build a tower that would reach the heavens. God's judgement was to confound the languages of the nations.
Promise Abraham to Moses. God made a special covenant with Abraham that he would work through Abraham's descendants to bless the whole world. Humanity would still try to make the best decisions they could, but they would have the influence of God's chosen people to bless them and give them an example. Ultimately, Jacob's sons became wicked, even with God's influence on Abraham, Isaac, and Jacob. Joseph was sold into slavery, and ultimately so also were the entire people of Israel.
Law: Moses to Christ. With the Exodus, God began to deal more directly with the people of Israel. Rather than influencing the patriarchs, God directly gave the law on Mt Sinai and began to lead them in the wilderness, through the Signs of the Fire and Cloud, and also through his presence in the Tabernacle, the forerunner of the Temple, and with the Ark of the covenant. The teachings of the law were collected into the TnNaK and Israel became the people of the book. With these symbols, God made a direct attempt to guide one nation, who would in turn, be a light for the rest of the world. Initially, God influenced the nation through priests such as Moses and Joshua, heroes (who we call Judges). These mighty men of God attempted to direct the progress of the nation, but were unsuccessful because everyone still did what was right in their own eyes.
Law II Because of their rebellion, the people demanded a king. After an unsuccessful attempt to install Saul, whom everyone thought of as Kingly, God instead anointed David as king over Israel. Though David was a man after God's own heart and was very early an example of what a good king should be, eventually he fell into temptation. After the complications of David's sons, Solomon eventually succeeds David as king and builds the temple which should be the pinnacle of the nation of Israel. Instead, succeeding kings made a series of poor choices and betrayed the covenant with God. The nation turned away and rebelled against following God's leadership. The people of Israel split into two kingdoms and after a series of unsuccessful kings were eventually carried away into captivity
Grace: Pentecost to the Rapture
Millennial kingdom:
These are not paths to salvation but manners in which God relates to Man. The are patterns of how God worked with people living in that age. The pattern is Responsibility => Failure - Judgement - Grace.
Dispensationalism's interpretation leads to a Pre-Millenial interpretation of Jesus' Second Coming, and a Pre-Tribulational interpretation of the rapture.
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