Credobaptists sometimes raise the objection: if baptism replaces circumcision and if it means the same thing as circumcision, why did the believing, regenerate Jews, who had been circumcised, require baptism? Had they not already received the sign and seal of the Covenant of Grace? The sign of circumcision, though no longer required upon the New Covenant, is not itself the result of the Mosaic Covenant's administration, but is institued as the sign and seal of the Abrahamic Covenant long before the law was given(Gen. 17). If, as paedobaptists (and many credobaptists) believe, circumcision is a sign and seal of regeneration(Deut. 10:16, 30:6) and justification by faith alone(Rom. 4:9-12), why do these believing Jews, who have already received the sign and seal of the Covenant of Grace, need to receive the sign and seal of its next (and final) administration in the New Covenant?
But this argument argument makes no sense from a redemptive-historical perspective. John the Baptist's baptism was a baptism of repentance and yet it is clear that the Pharisees who came to him needed to be baptized. The notion of receiving two different signs and seals of different administrations of the Covenant of Grace is not regarded as inconsistent in scripture even when both signs and seals (in this case, circumcision and the baptism and join) are applied with the same principle operative in both(repentance, justification, etc.). I should note that not all credobaptists argue in such a manner, as many baptists (though typically not dispensationalists) acknowledge that circumcision is not mere membership in a theocracy, but membership in the faithful, obedience, regenerate, justified covenant people of God.
That the circumcised, believing Jews were required to be baptized upon entering the New Covenant era is more an ecclesiological than a sacramental issue; the New Covenant church is ecclesiologically distinct from national Israel in that it reflects more clearly upon what Christ accomplished on the cross and the fulfilment of God's promise to Abraham that through his seed all of the nations would be blessed. These believing Jews had been members of national Israel, and in light of this tectonic ecclesiological shift, a new sign and seal was required in order to be part of the new ecclesiological configuration that is the New Covenant Church. In this sense, there is certainly some significant degree of legitimate discontinuity between the two redemptive epochs. Covenantalists ought to be careful not to obscure such legitimate discontinuities.
But didn't we just say that the Old Covenant saints were not, strictly speaking, part of a purely carnal, national theocrcy, but were to be counted, on the basis of their circumcision, among God's faithful, regenerate, justified covenant people? And what about the more strictly carnal and typological ordinances of the Old Covenant? We must be careful to strike an appropriate balance between the continuity and discontinuity between the two covenantal administrations. On the one hand, it is true that the Old Covenant administration was national in its administration, and nomologically speaking, largely carnal in its ordinanes.
But it was also moral and the very concept of obedience to God, whatever its administration, is itself inherently spiritual. It is important not to confuse the administration (in this case, carnal) with the principle operative in obedience to it (which is a spiritual principle). We must not confuse ecclesiology with nomology. Membership as part of God's covenant people is always spiritual insofar as it implies obedience and faithfulness which are themselves irreducibly spiritual concepts. Carnal, typological and prospective though many of the ordinances of the Old Covenant were, it is obedience to these ordinances, regardless of their nature or function within redemptive-history, that is essential to covenant membership, and this principle of obedience is irreducibly spiritual. The change from carnal to spiritual ordinances and organization from the Old to the New Covenant is in light of Christ's fulfilment of Old Testament types and ordinances, since they had served their relevant function, having foreshadowed and pointed to the Messiah who was to come, not a change in fundamental principle of what it meant to be a covenant of people of God. Once again, many baptists, fortunately, don't take such a position. Were the Jews not to render spiritual obedience to God? Were they not punished for violating God's commandments? Was not violation of these commandments spiritual transgression against God(even if punishment for these transgressions was often temporal)? Of course. It is difficult to even understand what a dispensationalist could mean by the argument that the Old Covenant was not a spiritual covenant.
Lest by acknowledging such a discontinuity between covenants I be accused of being a kind of quasi-dispensationalist by covenant theologians, I would argue that I do believe that the covenant people of both administrations can properly be referred to as "Israel" and "the Church." I reject as misguided the criticism by dispensationalists that if covenant theologians are consistent, they must adhere to the Mosaic Law. Their reasoning behind this is that if Israel is the Church and the Church is Israel, there ought to be one continual set of precepts the entire time without change. But this is, among other things, to confuse nomology with ecclesiology. An even more basic component of the problem is definitional. When I say that the Church is Israel and that Israel is the Church, what I am saying is that the words "church"(ekklesia, which is used of Israel in the LXX) and "Israel" refer to God's covenant people at any given point in redemptive-history, whether it be before the Law, during the Law, during the New Covenant, during the New Heavens and New Earth, and so on. It has no reference whatsoever to what sorts of precepts God's covenant people happen to be bound to at that given time.