Here is how James responds to the problem he faces:
What good is it, my brothers, if someone says he has faith but does not have works? Can that faith save him?… So also faith by itself, if it does not have works, is dead… You believe that God is one; you do well. Even the demons believe—and shudder! Do you want to be shown, you foolish person, that faith apart from works is useless? Was not Abraham our father justified by works when he offered up his son Isaac on the altar? You see that faith was active along with his works, and faith was completed by his works; and the Scripture was fulfilled that says, “Abraham believed God, and it was counted to him as righteousness”—and he was called a friend of God. You see that a person is justified by works and not by faith alone (James 2:14, 17, 19-24).
As usual, the context helps us to see how this word is being defined and used. What is the context? James 2 describes a serious problem. Brethren are favoring the rich and treating the poor badly. Such lack of love strikes at the royal law of love, the very heart of Jesus’ teaching (James 2:1-9). Though just “one point” of offense, it makes them guilty of breaking all of Christ’s law (James 2:10). They show so little mercy that they face the threat of receiving a merciless judgment (James 2:13; Matthew 5:7; 18:32-33).