Is the Covenant of Works a covenant based on merit? We affirm.
By the covenant of works, we mean that covenant provided to Adam, which takes the form, "do this and live." Thus, when we speak of the covenant of works, we are not distinguishing between the New Testament and the Old Testament, but between the Covenant of Works made with Adam and the Covenant of Grace through Christ (under various administrations, prominently the Mosaic and the Apostolic administrations).
By merit we do not mean merit in a strict sense, for merit in a strict sense would require that man give to God something more than God deserves. God, as Creator, deserves perfect obedience. Thus, it is impossible for man ever to have strict merit in the sight of God.
Nevertheless, there is covenantal or "pactum" merit in the Covenant of Works. Thus, God (by virtue of the covenant of works) bound himself to permit man to live if he obeyed. Thus, we do not refer to merited eternal life except upon condition of eternal obedience.
Thus, we do not deal in respect to this question with the issue of whether Adam would have been confirmed in obedience, if he had endured for a period of time in a state of obedience.
Our reasons for believing that there is merit (broadly defined) in the Covenant of Works is as follows:
1) Adam earned/deserved/merited death. Scripture teaches us that "the wages of sin is death" (Romans 6:23). The concept of wages implies merit, for wages are earned.
2) Christ earned/deserved/merited life. God had promised, if a man would keep God's statutes and judgments "he shall live in them: I am the LORD." (Leviticus 18:5) Christ kept them perfectly, and consequently deserved life.
The two principles serve to explain salvation
1) By Adam's disobedience we have come under the curse of the law, and have further doomed ourselves by our own personal disobedience. (Romans 5:12)
2) Since perfect obedience is the requirement of the law, it is impossible for the demerit (both Adam's as our federal head and our own) to be overcome by through our own merit obtained through the law. (Romans 3:20 and Galatians 2:16)
3) But Christ's death would be a violation of the Covenant of Works, since God promised life to covenant keepers. (Leviticus 18:5)
4) Moreover life for the elect would be a violation of the Covenant of Works, since man deserves death rather than life. (Romans 6:23)
5) Wherefore, Christ voluntarily (John 10:18) took the place (Romans 5:8) of the elect. (Hebrews 12:2)
6) Thereby, He was made sin for us (2 Corinthians 5:21); and
7) We (the elect) were made the righteous of God in Him (2 Corinthians 5:21).
We refer to this as double imputation. Thus, Christ was slain for us. He is our vicarious, substitutionary atonement. By double-imputation he was punished and we are made free. His merit (and life) becomes our merit, and our demerit (and death) became his.
If the covenant of works is not one of meriting life by obedience (Adam failing), then Christ could not merit life by fulfilling the law. But if Christ did not merit life, then God is not strictly just in giving life to the elect. Yet God is just and the justifier of the elect, namely those who believe in Jesus. (Romans 3:26)
Praise be to our Gracious and Just God,