One might ask whether the difference between carnally minded and spiritually minded refers to non-Christians and Christians respectively, or whether it is referring to Christians in both instances. Does the New Testament refer to Christians in both instances, contrasting the difference between Christians looking to themselves as the source of righteous living and Christians looking to God as the source of righteous living?

If one uses the word "Christian" as in "follower of Christ”, the carnally minded are not Christian. Returning to Romans 8, we will find evidence that Paul is not contrasting two sets of believers, those who are empowered toward holiness and those that are not. Instead, he compares those who seek God's favor through merit and those whom God is granting his favor apart from any thing that they might do.

Working with the definitions Paul sets up in Romans 8, Christians do not walk according to the flesh. It’s not that Christians don’t give in to temptation. They do. Paul is using the word flesh in a technical way. Those who are walking according to the flesh are attempting to meet the righteous requirements of the Mosaic Law on their own.

Christians are walking according to the spirit by Paul's definition. God does not condemn those in Christ Jesus to hell because the spirit of life in Christ Jesus has set them free from that death. The Law condemns all people, but not all people suffer that fate because He has given some his spirit. By definition, according to Romans 8:9, all Christians are walking according to the spirit because all Christians have the spirit of God dwelling in them.

The implied question in the first half of Romans 8 is, who are those who stand to inherit eternal life? He says, "But if the Spirit of Him who raised Jesus from the dead dwells in you, He who raised Christ from the dead will also give life to your mortal bodies through His Spirit who dwells in you." The issue is not who will have the power to resist sin, but who will survive this life into the next. The Spirit who raised Jesus from the dead will also raise you, if you are in Christ.

It is a mistake to interpret Romans 8 in terms of carnal vs. spiritual Christian. Paul is not making that distinction. Instead, he is differentiating between those who have the spirit of God and those who do not. Those who are walking according to the flesh are trusting in their own abilities to get them into the next life. That is on the one hand. On the other hand, the Spirit of God is working in those of faith. 

Paul was not done with his flow of thought in Chapter 7. In Chapter 7 he was giving us his assessment of the current state of those who attempt to gain God's favor through the works of the Law. He makes several statements to the effect that we are constitutionally incapable of pleasing God through obedience. He speaks about this in metaphorical terms when he says that he is dead. He is prisoner to a body of death that results in his inability to serve God, as he wants to. However, although that is our current state, it shall not always be so. As he says, "And if Christ is in you, the body is dead because of sin, but the Spirit is life because of righteousness." In other words, if his spirit is in you, you stand to inherit life. The body may be dead now, but you will inherit righteousness.

An Example:
Suppose I put names to the faces. Joe is attempting to please God and gain his favor. He reads his Bible and searches for ways to obey him do what he thinks is right. Sam on the other hand, has already gone down that road and has learned that God's favor is unattainable that way. Selfishness and double mindedness seem to taint all of his obedience and striving. He can not seem to serve God with pure motives. In addition, although he has done a good job of fooling others, he can not seem to obey God in his desires. Finally, one day, Sam cried out to God for mercy. In addition, someone told him the good news about how Jesus Christ.

There is therefore now no condemnation for Sam. He no longer lives his life concerning meriting God's favor. Instead, having the Spirit of God, Sam knows that God grants his favor to him apart from his ability to merit God's favor. In addition, the Spirit acts on Sam's behalf to bring Sam new wisdom, knowledge and understanding. Sam is now walking hand in hand with the Spirit. Christ will give Sam life and free him from the just requirements of the law, which is death.

Joe is still walking according to the flesh in the sense that he is trying to meet the just requirements of the Law himself. However, the just requirements of the law demand a death. Since Joe is not able to meet those requirements himself, he will die in his sins and ultimately suffer eternal condemnation. He can not avoid the penalty of death if he goes it alone. Joe has his mind set on meeting the just requirements of God by himself.

People like Joe tend to become self centered and self-justified. He sets his mind on how he measures up compared to you. Joe has it all together and you do not. Therefore, Joe is prone to hatred, contentions, jealousies, and outbursts of wrath, selfish ambitions, dissension, and heresies. (Gal. 5:20) Joe will have contempt for anyone who does not keep God's law the way that he does.

Sam has been where Joe is now. However, God has freed Sam from that condemnation because Sam is relying on Christ’s death to meet the just requirements of the law.  He has learned that pleasing God is impossible in his current inept state. As Sam looks at Joe, knowing that he is a sinner just like Joe. Sam is no different from all the other sinners except he has excepted God’s forgiveness. He also knows that God has forgiven him much and therefore he knows the true meaning of mercy. The Spirit is giving Sam a real sense, day-by-day, of how deep his sin goes and how invaluable is God's grace. As Sam begins to take hold of the truth about himself, he begins to see others in a different light. He no longer holds others in contempt because he is fully aware of his own frailty and failure. When people like Joe get angry with him, Sam can forgive Joe, knowing just how big a debt that Jesus paid. Sam's patience and grace toward Joe, is born of a new humility brought about by the Spirit at work in Sam. His mind is focused on the things of the Spirit and so he is experiencing life and peace. The irony is that although Joe is striving for righteousness, he is leaving hate, sin and death in his wake. How can Joe ever hope to please God if he finds himself living a life of wrath and contention?

Sam is in Christ and the Spirit of God is in Sam. In addition, although Sam finds that he is constitutionally incapable of pleasing God in his current state, God is granting Sam his approval anyway. The Spirit of God is at work in Sam's life to bring him wisdom and understanding born of humility and contrition. That Spirit is the same spirit that raised Jesus from the dead. Sam does not stand condemned, he stands justified in God's sight and God will some day give Sam the gift of life eternal. As a Son of God, the Spirit of God is leading Sam. In addition, as a son, Sam stands to inherit what the Father as decreed in his will. The irony for Sam is the fact that once Sam quit trying to gain God's approval through his own righteousness, his humility is rewarded with the very righteousness that he wanted. In the coming kingdom of righteousness, God will take away Sam's ineptitude and give him the ability to act the way his master acted -- in righteousness. They will be glorified together. 
 

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