Karma has been variously interpreted as allowing free will or negating it (pure fatalism) throughout the history of Hinduism. In the Yoga Sutras, Patanjali seems to suggest that despite all of our past and present conditioning, we do have free will. We choose an action, which creates a samskara (memory trace). If we choose it again, we reinforce the action into a predisposition to repeat it. But we never have to give into the predisposition; we can choose not to do so, which weakens the samskara. We remain responsible even though our conditioning predisposes us towards and against certain actions. What’s interesting about Patanjali is that we remain responsible even for our samskaras, the very things that predispose us, since they themselves emerged from freely chosen actions.
This is a positive view because it means changes of life and behaviour are always possible, shifts away from behaviours and mental attitudes that cause suffering and towards more liberating ones that lead to the cessation of suffering and the cultivation of virtues. On the fatalistic thesis, this isn’t really possible; it is simply our conditioning that determines everything we say and do and we have no choice in the matter. Thus, if we’re ignorant and cruel, we’ll remain so, unless, altogether against our will, some new strand of conditioning suddenly predisposes us to a new lifestyle.
However, the situation is still more complex. Even though free will always remains open to us as a possibility, most people rarely use it most of the time. Instead, we often live our lives on autopilot, totally at the mercy of whims, desires, circumstances, societal expectations, addictive tendencies, etc. So, just because we have free will as an option, does not mean that we necessarily use it.
I would argue, however, that detachedly witnessing thoughts, becoming aware of colourings such as I-ness, aversion, attachment, craving, etc., moves us away from an autopilot lifestyle and towards a more liberated lifestyle, a life based more on free choices than on automatic actions that flow out of past conditioning.