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Wikipedia summarizes a traditional "Biblical Theology" approach to interpreting the Bible as follows:

Biblical theology seeks to understand the progressive unfolding of God's special revelation throughout history... Biblical theology is thus historical and chronological in its design; and in fact, a close synonym for biblical theology, at least in its wide-angle task of accounting for all of special revelation, is the term “redemptive history”. Biblical theology is not always pursued in so broad a fashion, however; sometimes, certain themes are approached in a biblical theological manner; for instance, a biblical theology of holy space in worship would seek to understand how that specific motif unfolded in redemptive history, from the beginning of revelation until the end. Another narrower application of biblical theology would be the study of the unfolding of revelation during a specific time period (for example, post-exilic biblical theology); or the study of the development of themes in a particular author (for example, Johannine biblical theology); but ultimately, even these narrower applications are truly biblical-theological in nature only as they seek to advance an understanding of the progression of redemptive history as a whole.

Likewise it describes the Dispensationalist approach as follows:

Each dispensation is marked by a cycle: God reveals himself and his truth to humanity in a new way. Humanity is held responsible to conform to that revelation. Humanity rebels and fails the test. God judges humanity and introduces a new period of probation under a new administration. Ultimately, dispensationalism demonstrates the progress of God's revelation to man and God's sovereignty through history.

The outcome of these approaches is markedly different: The dispensational view would say that the State of Israel is vitally important for the unfolding of God's plan. The Biblical Theological view would not rate it as a high priority. My question is what is different about the core hermeneutic in each approach that leads to such different end points? Where do they first deviate?

As a case study, say a modern dispensationalist were to read Graeme Goldsworthy's books on Biblical Theology. How would they criticize his basic hermeneutic? What interpretational framework in Graeme Goldsworthy's explanations would make it hard for a reader following his perspective to see the state of Israel in present history as an important part of God's New Testament plan?

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    This is more a question for the Theology SX not Bible hermeneutics. However, I will suggest that dispensationalism differs from other systems by starting with an a-priory assumption (3 cycles, 7 cycles or 12 cycles depending on the author) which is not Biblically explicit, and from that a-priory assumption flows much else.
    – user25930
    Oct 27, 2018 at 1:32

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Dispensationalism as a modern systematic theology was started by J.N. Darby in Britain in 1828 who was only 28 years old. He claimed he got his insights by revelation! But his biographical research shows that he picked up ideas from other clergymen. Darby started out as a student of law, but dropped out of that profession.

He was influenced by the Catholic Apostolic Church teachings, the Powerscourt prophecy conferences...and especially by a Rev. Tweedy from Ireland. (See Tim LaHaye, No Fear of the Storm)

The Core Hermeneutic of Dispensationalism is not the idea of dispensations as a way of describing historical Redemptive History. There have been may scholars throughout time who have divided God's dealings (covenants) by various eras or time periods. Some divided time using eras of the Trinity: the era of the Father, era of the Son, and the present era of the Holy Spirit. Still others worked out more elaborate schemes using 5, 7, 10 times periods. Cyrus Scofield is famous for his list in the Study Bible that bears his name. (Innocence, Conscience, Human Government, Law, Grace, etc.)

They all depart from the simple two-fold Covenant plan used in the Bible: O.T. and N.T. (Hebrews 8:13)

But the main teaching that is the Core Hermeneutic which distinguishes Disp. from orthodox Christianity is the teaching that Mr. Tweedy planted in Darby's mind: the idea that there are two distinct destinies for the Jews and the Gentiles. The prophecies in the O.T. are to be still fulfilled literally with a physical Jerusalem and Judaea as the center of it all. The Gentiles (Gentile Church) is a "plan B" that must be gotten out of the way (secret rapture) so the Jews can finally be exalted in the earth!

This Core teaching is a heretical departure from the orthodox doctrines drawn from the N.T. which looks at the Old Testament redemption history as a prefigure of the New Covenant realities. First the natural, then the Spiritual All the O.T. worship practices, holy days, etc. were types, figures, symbols of things to come. (See whole book of Hebrews!). Disp. ignores all this teaching of the Early Church.

But more importantly, the CORE HERMENEUTIC of Disp. violates the whole work of Jesus and the Cross by maintaining a dividing wall between Jew and Gentile, whereas the clearest teaching of the Apostles and Jesus is that the Middle Wall of Separation has been torn down! Gentiles are fellow heirs with the Patriarchs. They are fellow-citizens in the Church (Kingdom of God) (See Ephesians 2, 1 Peter 2) For God so loved the WORLD that... (John 3:16)

Spiritual Kingdom Instead of emphasis on a Spiritual Kingdom, Disp. emphasis on the Jewish supremacy also violates the orthodox theology concept of Kingdom. Its view of a Physical Kingdom ruled by Jews goes against the teaching of Jesus.

  • For the Kingdom of God is not meat or drink, but righteousness and peace, and joy in the Holy Spirit (Romans 14:17)
  • The Kingdom of God cometh not with observation...behold, the Kingdom of God is within you. (Luke 17:20,21)
  • The Law and prophets were until John; since that time the Kingdom of God is preached, and every an presses into it. (Luke 16:16)
  • But if I, with the finger of God, cast out devils, no doubt the Kingdom of God is come upon you. (Luke 11:20)

The CORE HERMENEUTIC of Disp. is the misunderstanding that Mr.Tweedy placed in the young mind of Darby: an erected Wall of Separation between Jew and all others. It has caused a misconstruing of the Church, Kingdom, redemption, Jewish hopes, prophecy, etc. In light of all these considerations, Disp. can in no way be considered orthodox, Christian, traditional religion. In spite of all the mass media presentations, and prophecy conferences.

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