You've hit upon one of the great philosophical questions. More simply stated,
If the universe is deterministic, can free will exist?
The answer is: not if there is such a thing as a soul (unexpected outcome!)
Here goes:
If every action is predetermined by the system, then given the state of the entire universe a person's whole life is predetermined. That person still has free will, because they are a part of that system; the thing that is "that person" is a conglomeration of information and laws of interaction, and since that person is a part of the system, that person has influence on the system. Therefore, that person's actions are not predetermined by everything else in the universe; they are predetermined by the whole universe, which includes that person.

But, if the thing that constitutes consciousness is a "soul" which exists outside of the normal laws of physics, then if you also accept determinism free will does not exist, because the soul has no influence on the outcome of events; the universe predetermines that outcome.

So, since we're so attached to the idea of free will, the inclination is to either drop the concept of determinism or drop the concept of the soul. Sadly, most people like the idea of the soul better than the idea of determinism, even though we have much better evidence for exactly the opposite conclusion, that there are no souls and the universe is deterministic.