Some materialists are a little too eager to claim that free will is necessarily exploded if our consciousness is based in the material world and follows lawful processes. Of course this has implications for morality. However such an eager deconstruction is simplistic, and furthermore cannot be specifically pinned on
Regarding the possibility of free will, we recognize the following categories of relationships between any discrete entities in the universe, which must include conscious entities like humans:
1) Lawful relationships: if operation X happens to entity A, then B always results. It is not trivial to note that knowledge of lawful relationships must result from repeated pattern recognition. It is frequently pointed out that after building his system of mechanics, Newton loudly proclaimed what he saw as a pre-determined clockwork universe; despite this he somehow avoided moral nihilism.
2) No relationship (noise): a failure of pattern recognition. Perhaps there is no pattern, or perhaps there is but we're too stupid to see it. Whether there is a generalized way to tell the difference between these two possibilities without knowing the pattern if one is determined exists is another question. Note that nuclear decay is lawful only en masse but at the level of individual nuclei is random; quantum mechanics famously emphasizes the non-predictable (non-lawful) behavior of individual particles. Matiyasevich showed more generally than Goedel that all systems must contain detail, that is, true statements that cannot be deduced by the axioms always exist ("details"). But this still doesn't get us out of the woods because intentionality is not random.
3) Free Intentionality: Goal-seeking behavior that is not random but not forced by physical law to make the specific choices it does. This is most consistent with the folk model of behavior. Many materialists would claim this is a myth forced on us by our own neurology, and that there is no space for any options besides 1 or 2.
There are several answers to the problem of free intentionality that do not involve an appeal to faith ("i.e. It seems true so it must be"): yes, it does seem true, and while the preceding statement isn't the end of the argument, certainly it's premature to assume that free intentionality must be an illusion because our understanding in 2010 of the way the world works doesn't allow for that class of actions. (Note Newton's smugness.) We have nothing close to a complete understanding of the nervous system, so it's a little soon to be discarding introspection.
Grant for the moment that such a thing as free intentional behavior exists. I would argue (separately) that the property of free intentional behavior exists more in some entities than others, and that this property is lawfully determined. It is less clear exactly what those properties must share in order to exhibit free intentionality. Importantly, must free-intentional entities have experience; that is, can "dead" systems or much less advanced systems like cnidarians have free intentionality but not be subjectively aware? Because we're talking about humans in these discussions the assumption is that we would have both free intentionality and experience, but if an argument has been made that they must co-occur, I haven't yet seen it.
The bogeyman of free will is whether consciousness is an epiphenomenon of the real process of cognition, like a shadow or aftereffect. In some cases it certainly is: EEG studies have shown that people often decide to make a movement up to 300 milliseconds before they do, and the experimenter watching the trace literally knows before they do that they're about to move. First, because this is sometimes the case does not mean it is always the case.
Second, and more critically, why is it so troubling if our consciousness is on a tape delay? Assuming free intentionality applies to your nervous system, but not to your conscious awareness (if it's epiphenomenal) then you subconsciously have free will and become of a free intentional decision after it was made. In one sense "you" are just along for the ride, but it's a ride on a computer with free will that has been telling "you" what to do in a deceptive way since the day you were born and which cannot be separated from "you" without the end of your experience (because that means cutting your brain out). As long as the inseparable computer that's giving the orders has free intentionality, we have no right to be upset by the arrangement. The key to whether we can make free intentional acts is therefore not in the length of the tape delay, but in the behavior of the computer that's making decisions for "you". Our understanding of the nervous system does not yet allow us to rule out category #3 above, especially in light of strong introspective
IF FREE INTENTIONALITY DOES NOT EXIST, WHY DOES IT SEEM LIKE IT DOES?
1) If free intentionality is in fact an illusion - why? Why would it be useful for organisms to deceive themselves into thinking that they have free will? The same question can be asked of conscious experience itself. How could such a thing be evolutionarily selected for, since it seems to have no outward manifestation?
2) For those who believe in a pre-determined universe, this means we're living in a static four-dimensional block of space-time. Why does "now" seem to be a special point in time? By this view, "now" is an illusion. How could organisms have developed that do not sense the full sweep of their existence? Why would this narrow focus on a gradually-shifting, illusorily-special space?
3) Free intentionality seems to manifest more at greater time scales. It is clear that there are behaviors resulting from Category 1 lawful relationships in every organism, including ourselves. If there is free intentionality, it a) probably occurs at least in the executive decision center and b) manifests over longer periods of time. Case in point, tell a person they have no free will and a common response is to hop on one foot or do something else socially unexpected. Find that person in exactly one month's time, and try to measure how different their life is because they hopped on one foot for five seconds; not very much I'll wager. It's the person who is making considered decisions based on semantic reasoning whose life can change over time. If free intentionality exists anywhere, it is in this kind of cognition.
Consciousness and how it got to be that way