Spiritual Baptism/Water Baptism
Throughout the gospel of John, the Lord Jesus is presented to us as the end of ritual, the fulfillment of the Law and Prophets, and the One whereby true purification and grace come to those who believe in Him. In John 1:17 we read: “…the law came through Moses, but grace and truth came through Jesus Christ;” in John 2, we see the better wine of Christ that truly satisfies (as opposed to the old wine which was good, but not as good), and we see the true Temple of God (Christ Jesus) which replaces the old temple made by human hands. John 3 continues this pattern by presenting the true Spirit baptism given by Christ (i.e. baptism of the Holy Spirit) contrasted against the temporary and preparatory water baptism given by John the Baptist.
John’s contrast of Nicodemus and John the Baptist, moreover, only serves to further stress this distinction between that which was temporary, passing away, and points to Christ, and the reality found in Him. Nicodemus’ attitude and approach to Christ, as well as his amazement at His statement that the kingdom of God is a spiritual kingdom (i.e. one that is “not of this world”) stands in sharp contrast to John the Baptist’s humility, directing others to Christ, and His recognition that Christ is the King of Israel (as evidenced, I believe, in his recognition of Christ as the Bridegroom). The full reality of all that is written in the Law and Prophets has found its fulfillment in Christ, and it is only those who have been born again, buried with Christ and raised with Him as well, who have been baptized into His death with Him – only the regenerated elect – can see both the King and His Kingdom, and only they can enter it.
J.C. Ryle sums up what is meant by “the kingdom of God” quite nicely when he writes:
This expression [i.e. “the kingdom of God”] means that spiritual kingdom which messiah came into the world to set up, and of which all believers are the subjects, – the kingdom which is now small, and weak, and despised, but which shall be great and glorious at the second advent. Our Lord declares that no man can belong to that kingdom and be one of its subjects, without a new birth. To belong to the covenant of Israel with all its temporal privileges, a man need only be born of Jewish parents. To belong to Messiah’s kingdom, a man must be “born again” of the Spirit, and have a new heart.
Following this Spirit/Flesh distinction is the law/gospel distinction given in the Lord’s words to Nicodemus. We read:
10 Jesus answered and said to him, “Are you the teacher of Israel, and do not know these things? 11 Most assuredly, I say to you, We speak what We know and testify what We have seen, and you do not receive Our witness. 12 If I have told you earthly things and you do not believe, how will you believe if I tell you heavenly things? 13 No one has ascended to heaven but He who came down from heaven, that is, the Son of Man who is in heaven. 14 And as Moses lifted up the serpent in the wilderness, even so must the Son of Man be lifted up, 15 that whoever believes in Him should not perish but have eternal life.
The law/gospel distinction here is seen in (a.)the person whom Christ is addressing, (b.)the text He is explaining and from which His address proceeds, and (c.)the soteriological conclusions drawn from the text He is using. Let’s look at these very briefly.
(a.) “a man of the Pharisees…a ruler of the Jews…”[v.1]: Nicodemus was a Pharisee, placing heavy emphasis on the Law and ritual. Christ, being the end of ritual/ceremony and the fulfillment of the Law, stands in sharp contrast to him.
(b.) The Text: The text in question is Numbers 21:4-9, and it is significant in quite a few ways. Firstly, it undermines the belief that all Jews are God’s people. The judgment of God fell upon all unbelievers indiscriminately, and salvation was offered to all who would look in faith. Those who would not look in faith to the serpent raised upon the pole would not be saved. This is something that nationalists completely miss. The very Law which Nicodemus held with pride was being opened up, exegeted, by the Lord Jesus to undermine this fundamental error. The people of God who are saved, from His judgment, are those who look in faith to Him and accept His provision for atonement.
This leads us to the second point: The text implicitly teaches that it is not observance of the Law that saves, but faith in Christ. Nicodemus was indeed “the teacher of Israel,” but his familiarity with the Law was a dead familiarity that could not see that salvation is of grace through faith in the One whom God has sent; salvation is not of works at all. The Law, rather, can only bring death, knowledge of one’s guiltiness before God, and point us to the One whom God has provided for His people (i.e. the elect, believing ones). Nicodemus’ blindness is evident in this last place even more prominently, for Numbers 21:4-9, I think, very clearly shows: (i.)Israel’s inability to obey the Law, (ii.)the Law’s inability to save, and (iii.)the fact that salvation was something which Moses could only point to, it was outside of himself (in the form of the serpent hanged upon the pole).
(c.) Soteriological Conclusions: (a.)Salvation was of the Jews, but for all men (i.e. all types of men, and not just Jews); (b.)Salvation is by faith alone in the One whom God has sent, and not at all by works; (c.)the Law cannot save men, it serves to show men their sinfulness and their need for Christ, and points them to the Savior.
The distinction between law and gospel, or law and grace, therefore, is not a theological construct foisted upon the text by reformed theologians, but is through and through biblical. The Lord’s words to Nicodemus show us this beyond the shadow of a doubt, and are echoed with greater clarity in later narratives.
John Murray observes:
…(1.)Law can do nothing to justify the person who in any particular has violated its sanctity and come under its curse. Law, as law, has no expiatory provision; it exercises no forgiving grace; and it has no power of enablement to the fulfillment of its own demand. It knows no clemency for the remission of guilt; it provides no righteousness to meet our iniquity; it exerts no constraining power to reclaim our waywardness; it knows no mercy to melt our hearts in penitence and new obedience. (2.)It can do nothing to relieve the bondage to sin; it accentuates and confirms that bondage. It is this impossibility to alleviate the bondage to sin that is particularly in view in Romans 6:14. The person who is ‘under law’, the person upon whom only law has been brought o bear, the person whose life has been exclusively by the resources and potencies of the law, is a bondservant of sin. And the more intelligently and resolutely a person commits himself to law the more abandoned becomes his slavery to sin. Hence deliverance from the bondage to sin must come from an entirely different source.
It is in this light that the apostle’s antithetical expression ‘under grace’ becomes significant. The word ‘grace’ sums up everything that by way of contrast with law is embraced in the provisions of redemption. …in respect of the subject with which Paul is dealing there is an absolute antithesis between the potency of law and the potency of grace, between the provisions of the law and the provisions of the grace. Grace is the sovereign will and power of God coming to expression, not for the regulation of thought and conduct consonant with God’s holiness, but for the deliverance of men from unholiness. Grace is deliverance from that which consists in transgressions of the law.
 John 1:32-34
 3:3, 5
 Cf. Psalm 45
 Cf. Romans 6:4; Colossians 3:1, et al
 Expository Thoughts on John, Vol. 1 (p. 131); Banner of Truth Trust, 1987
 Cf. John 5:39, 45-46; 8:5, 7, 9-11;
 John Murray, Principles of Conduct, pp. 185-186; Eerdman’s, 1957