I wonder if we’re right to be quite so leery of the punishment aspect of the cross. I guess a lot of it has to do with not wanting to attribute vindictiveness, cruelty to God. Jesus’ death was an anticipation of the punishment of Israel – I suggest in my book on Romans that in Romans 8:3, when Paul speaks of the Jesus coming in the ‘likeness of sinful flesh’, he means that Jesus appeared to be a rebel, he appeared to be part of the problem, in the eyes of people, and received the punishment for rebellion. He appeared to have defied Rome just as Israel would later actually defy Rome and so was ‘punished’ by Rome as an instrument of the wrath of God when in fact he was innocent. That all seems to me to work rather well narratively. Within the narrative about Israel his death could be seen both as an atonement and as a punishment – these are distinct ideas.
But Paul’s argument about judgment on Israel in Romans is set against the background of universal sin and the consequences or wages of sin, which is death. The Law failed because Israel shared the basic sinfulness of all humanity – the Law couldn’t correct that. We run into that basic equation as soon as we move outside the sphere of the Law: death is still seen as a consequence – and I guess, therefore, as a punishment – for our sin. So although we have moved beyond the direct relevance of the ‘penal substitutionary’ argument, in effect Jesus’s death on the cross was still the result of a basic existential condition, notionally derived from Adam. So you sort of have penal substitution by extension, which is perhaps what John is getting at when he says: ‘He is the propitiation for our sins, and not for ours only but also for the sins of the whole world’ (1 Jn. 2:2).