Brigid, that’s a terrific question - "how do we judge what’s morally right or wrong."
Morality is the subject of thousands of years of philosophical thought and study.
But everyone agrees that we have the ability to reason. We base our beilief in God partially on that ability. One could not say that we believe in God because of the Bible; people believed in God long before the Bible and even any of the Old Testament books were ever written.
The universe is an orderly creation; so orderly that its existence suggests an intelligent Creator.
And if we can reason that there is a God, then we can reason that He placed us here on Earth for a purpose.
Although, through our limited human intellect, we can’t comprehend the totality of our Creator, God has revealed Himself more fully to us through Divine Revelation and especially through Christ’s perfect example and instruction.
Take the sin of murder; the premeditated unjustifiable action of taking an innocent human life. We inherently know that murder is wrong because it is easy for us to see the wrongness of someone indiscriminately taking our own lives. And if it’s wrong for someone to murder us, then it must be just as wrong for us to murder someone else, no matter the reason.
Now think for a minute - the same can be said of every sin. It is never "OK" to sin even if the situation is difficult. Situational Ethics is a mental blight upon those who subscribe to the errant ideologies of modernist philosophy and as such was condemned by the Church. Actions are either morally right, morally wrong, or morally neutral, and are so irrespective of any situation. Could anyone every imagine Our Lord doing something that was morally wrong? He says that He is the Way, the Truth, and the Life. As the Truth, would He lie to save another’s life? No. He would however lay down His own life.
It is clear from the Bible that we, as individuals, can’t pass judgement on others; but it is just as clear that we can judge our own actions and those of our neighbor for our sakes and for the common good. If none can judge actions as you suggest, then by what right do the courts exist to determine innocence or guilt? By what right does the Church pass judgements and declare people anathema? The biblical passage you refer to must be understood in the proper context, which isn’t entirely possible if the rest of scripture is ignored.