The Bible does not tell us exactly how human souls are created, but we can speculate about the process based on what the Bible does say. From the biblical record, people have extrapolated two possible ways that human souls are created. These two views are called Traducianism and Creationism. There is also a third view, which lacks biblical support.
Traducianism is the idea that a person's soul is created at the same time their physical body is created—that is, the soul is generated from the physical parents just as is the physical body of a child. This theory is plausible because the Bible says that God made Adam a "living soul" when He breathed life into him (Genesis 2:7 KJV), but this action is not recorded elsewhere in the Bible, implying that all human beings came by their souls in another way. Since Adam was the father of all men and women, physically speaking, and we know we inherit our sin nature from Adam as well (Romans 5:12), it is plausible to assume that the soul is also inherited. Traducianism depends on the assumption that the body and soul are intertwined, and that in a sense, the soul depends upon the body for existence, and the method of generation of the soul by a physical process is unclear. This is a weakness in the theory.
The Creationist viewpoint says that God creates a soul each time a human being is conceived. The Bible seems to place a separation between the creation of the physical body and the creation of the soul (Ecclesiastes 12:7; Isaiah 42:5; Zechariah 12:1; Hebrews 12:9). There are two problems with this theory. One, Genesis 2:2–3 can be interpreted that once God was done creating everything during the first six days, He ceased to create anything new. Second, since all human beings are subject to the sin nature, which came from Adam, how does the soul become poisoned by sin? Is it a result of being in the body? These are questions that we simply cannot answer without information that God has chosen not to reveal at this time.
A third theory, often held by new age religions and faiths which depend upon a reincarnation view of the soul, is that a "warehouse" of souls exists in heaven, all of which were created by God at the beginning, and each time a new body is created, God attaches a soul to it. This view has no biblical support whatsoever.
Whether Traducianism or Creationism or some other yet-to-be-realized truth holds the answer to the generation of human souls, we know that all souls originate with God, who is the Maker of all things that exist (John 1:1–3).
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