"Ye are gods." Since almost their beginning, Latter-day Saints have used this phrase, quoted by Jesus in John 10:34 from its original setting in Psalm 82:6, as biblical evidence to support their doctrine of exaltation, which holds that humans are gods in embryo.
Critics of the Latter-day Saints have countered, though, that Mormons misunderstand and misuse the Bible on this point.
Who is right? In order to answer this question, it's necessary to examine each of the passages separately.
In John 10, Jesus is about to be stoned to death for blasphemy because, though he is human, he seems to be declaring himself divine. "Jesus answered them, 'Is it not written in your Law, "I have said you are gods?" If he called them "gods," to whom the word of God came—and the Scripture cannot be broken—what about the one whom the Father set apart as his very own and sent into the world? Why then do you accuse me of blasphemy because I said, 'I am God's Son?'" (John 10:34-36, New International Version)
The argument seems to be that the unbelieving Jews were silly to assault Jesus for so petty an offense as claiming to be the Son of God when scripture itself, God's own word, sometimes speaks of mere men as "gods" or as the "sons of God." Or, to put it another way, if there is any sense in which ordinary humans can fitly be spoken of as "gods," how much more appropriate would it be to apply that term to somebody whom the Father had set apart and sent?
The consensus of modern biblical scholarship, by contrast, holds that the beings addressed as "gods" in Psalm 82 are, in fact, members of the heavenly divine court. The notion of such a court was common not only in ancient Israel but in surrounding nations. In Israelite belief, especially with the passage of time, the members of the court were thought to be angels. In surrounding nations, and probably in earliest Israel, too, they were thought to be actual gods, subordinate to a chief god. The scholarly consensus about Psalm 82, however, seems to nullify Jesus' argument as it is recorded in John's gospel. It would scarcely have been convincing to the skeptical Jews in his audience if Jesus, a seemingly ordinary and evidently mortal man, had sought to justify his own claim to divinity by referring to ancient angels or deities manifestly (in their eyes) quite unlike himself.
Some have tried to argue that the "gods" of Psalm 82 were actually human judges. But this claim has fallen sharply out of favor among scholars over the past century. Moreover, Jesus' citation of a metaphorical use of the term "god" wouldn't go very far toward justifying his claim of literal divinity. He would seem merely to be playing a word game, practicing a semantic sleight of hand, and, in fact, to be committing the logical fallacy of equivocation, wherein a word surreptitiously changes its meaning from one part of an argument to another. It would be as if someone were declaring himself, madly enough, to be a vast ball of fusion-inflamed gases. We would scarcely be convinced if he were to offer, as evidence for the plausibility of his claim, the fact that Rudolph Valentino, Lucille Ball and John Wayne are generally called stars, and to demand that we, in fairness, grant the same title to him.
If John 10:34 must refer to ordinary human beings in order to have the force Jesus intended it to have, and if Psalm 82 almost certainly refers to members of the divine court in heaven, the only way to save Jesus from a charge of misapplying the psalm is to understand ordinary human beings as "gods" and as at least onetime members of the divine, heavenly court.
For a lengthy and detailed argument making precisely that equation, see Daniel C. Peterson, "'Ye are Gods': Psalm 82 and John 10 as Witnesses to the Divine Nature of Humankind," in Stephen D. Ricks, Donald W. Parry, and Andrew H. Hedges, eds., "The Disciple as Scholar: Essays on Scripture and the Ancient World in Honor of Richard Lloyd Anderson," (Provo: FARMS, 2000), 471-594. The article is also online, at maxwellinstitute.byu.edu/publications/books/?bookid=46&chapid=258.
Daniel C. Peterson is a professor of Islamic studies and Arabic at BYU, where he also serves as editor in chief of the Middle Eastern Texts Initiative and as director of outreach for the Neal A. Maxwell Institute for Religious Scholarship. He is the founder of MormonScholarsTestify.org.