Our passage for today has a controversial history in the church dating from the protestant reformation. The reformers like Luther and Calvin were guided by a few core commitments. One of the most important was that people are saved by God's grace alone through faith instead of by their good deeds. This belief continues to be important in our Presbyterian tradition. Since James emphasizes that faith without works is dead, this passage was often used as evidence against the reformers' focus on faith.
In reality, there isn't a conflict because James is right and the reformers agreed with him. Faith doesn't just mean believing something; it means being committed to something and putting our trust in something. So believing that God exists is one thing; as James says, even demons believe. But having faith in God is something else entirely. Faith in God means we trust and commit to following God. That means our faith will be reflected in our actions, so people can see our faith by how we serve our neighbors.