One constant objection to the doctrine of imputed righteousness — that God accredits the righteousness of Christ to sinners — is that for God to be just, he cannot simply call sinners righteous. He must make them so. Thus, God has to infuse righteousness, not impute it. Sinners must be made ontologically righteous. “Legal fiction”, as some call it, is not sufficient for the redemption of sinners. God cannot “dress up” a sinner and call him just.
Charles Hodge has a helpful response to this objection. He says,
Another standing objection to the Protestant doctrine has been so often met, that nothing but its constant repetition justifies a repetition of the answer. It is said to be absurd that one man should be righteous with the righteousness of another; that for God to pronounce the unjust just is a contradiction. This is a mere play on words. It is, however, very serious play; for it is caricaturing truth. It is indeed certain that the subjective, inherent quality of one person or thing cannot by imputation become the inherent characteristic of any other person or thing. Wax cannot become hard by the imputation of the hardness of a stone; nor can a brute become rational by the imputation of the intelligence of a man; nor the wicked become good by the imputation of the goodness of other men. But what has this to do with one man’s assuming the responsibility of another man? If among men the bankrupt can become solvent by a rich man’s assuming his responsibilities, why in the court of God may not the guilty become righteous by the Son of God’s assuming their responsibilities? If He was made sin for us, why may we not be made the righteousness of God in Him? The objection assumes that the word “just” or “righteous” in this connection, expresses moral character; whereas in the Bible, when used in relation to this subject, it is always used in a judicial sense, i. e., it expresses the relation of the person spoken of to justice. Δίκαιος is antithetical to ὑπόδικος. The man with regard to whom justice is unsatisfied, is ὑπόδικος, “guilty.” He with regard to whom justice is satisfied, is δίκαιος, “righteous .” To declare righteous, therefore , is not to declare holy; and to impute righteousness is not to impute goodness; but simply to regard and pronounce those who receive the gift of Christ’s righteousness, free from condemnation and entitled to eternal life for his sake.
Hodge explains that the concept of imputation exists in relation to justice, which is legal, or juridical. In other words, justice has to do with the sinner’s record in relation to God’s law and justice, not his subjective holiness or interior state. This is another subject altogether.
Hodge explains this, saying,
[Many] theologians in many instances object to the Protestant doctrine of justification, that it is outward; concerns only legal relations; disregards the true nature of the mystical union; and represents Christ and his righteousness as purely objective, instead of looking upon Christ as giving Himself, his life to become the life of the believer, and with his life conveying its merits and its power… What is urged as an objection to the doctrine is true. It does concern what is outward and objective; what is done for the sinner rather than what is done within him. But then it is to be considered, first, that this is what the sinner needs. He requires not only that his nature should be renewed and that a new principle of spiritual or divine life should be communicated to him; but also that his guilt should be removed, his sins expiated, and justice satisfied, as the preliminary condition of his enjoying this new life, and being restored to the favour of God … The Bible makes quite as prominent what Christ does for us, as what He does in us. It says as much of his objective, expiatory work, as of the communication of a higher spiritual life to believers. It is only by ignoring this objective work of Christ , or by merging justification into inward renovation, that this objection has force or even plausibility. Protestants do not depreciate the value and necessity of the new life derived from Christ, because, in obedience to the Scriptures, they insist so strenuously upon the satisfaction which He has rendered by his perfect righteousness to the justice of God. Without the latter, the former is impossible.
What Hodge is explaining here, is that while sanctification or regeneration are important points in scripture, they are not the same as justification. In fact, they are concerned with different things. Imputation is concerned with the believer’s legal state: How can a sinner have perfect obedience before a holy God? Regeneration is concerned with the believer’s inward state: How can a sinful person be made new? This makes justification by definition extrinsic, and regeneration intrinsic. They are two actions of God, not one.