No reconciliation between Paul and James is necessary. They are good friends and they preach the same gospel.
It is not the case—as some people have supposed—that Paul teaches a doctrine of justification by faith and James teaches a doctrine of justification by works. In these two passages they were addressing two very different concerns.
Paul was making the case in Romans that Gentiles don’t have to become Jews in order to be justified. When he says, “one is justified by faith apart from works of the law,” he means, apart from circumcision, apart from the kosher laws, apart the ritual cleansing laws, apart from keeping the Jewish holy days, and so on.
In other words, a Gentile may come into a right standing with God through Jesus Christ by faith, without adopting the distinctive features of Judaism. Elsewhere he makes the point that the same is true even of Jews. They too are justified by faith, and can be so justified even apart from keeping kosher and so on. He makes this point in Galatians 2:15-16.
We ourselves are Jews by birth and not Gentile sinners; yet we know that a person is not justified by works of the law [read: circumcision, keeping kosher, etc.] but through faith in Jesus Christ, so we also [we Jews who are circumcised and keep kosher, etc.] have believed in Christ Jesus, in order to be justified by faith in Christ and not by works of the law [again: not by circumcision, keeping kosher, etc.], because by works of the law no one will be justified.It’s very important to understand what he means when he speaks of the “works of the law.” He means these distinctive elements of the Jewish religion. He does not mean that a person is justified apart from obedience to God. This is made abundantly clear when he says in First Corinthians, “Neither circumcision counts for anything nor uncircumcision, but keeping the commandments of God” (7:19).
Circumcision was one of the works of the law—in fact the chief work of the law in the Jewish mind. But Paul points out that the ritual or ceremonial elements of the Jewish law are not of the essence of our relationship to God (“neither circumcision counts for anything nor uncircumcision”); whereas faith, which manifests itself in obedience, is.
And this point—that faith reveals itself in obedience—is the very thing that James is talking about. He wishes to make it very clear that faith is not merely an assent to a proposition. Do you assent to the proposition that there is one God? Good, you should. Even the demons assent to this (Jas. 2:19). But are they justified? No, because faith is more than mere agreement that a proposition is true. It’s an attitude of the heart toward God, or an orientation of the heart, that serves as the controlling motive of one’s life so that when God speaks, we obey.
Obedience is the essence of faith. Where you find a person who renders consistent obedience to God—and I don’t mean he never stumbles or falters, but that his life can be characterized as obedient—there you find a man of faith. Where you find a life of consistent disregard for God, and disobedience to his commandments, there you find an unbeliever. And in this, Paul and James both agree.