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An element of micro sociology, interactionism posits that individuals respond to a private definition of a situation rather than to the external objective components of the situation itself. Therefore what an individual defines as real becomes a reality (even though the other participants may disagree with the definition and the subsequently formulated reality). Interactionsim defines individual identity as being formed through interactions within society. The theory holds that identity is shaped by social interactions like conflict and cooperation and role taking.
The theory posit that identity is formed by observing how others interact with us and label us, thus forming Cooley's "looking glass self." [A criticism of interactionism is that this leaves unanswered occurrences when self-perception is different from how others perceive us, when we are surprised or shocked to learn how others see us (either better or worse than we perceive our own self-identity). These revelations often come through moments of conflict, although they may occur during moments of cooperation as well.]
For interactionists, identity is based upon the presumption that self-ness (self awareness) is reflexive. An individual can reflect on (think about, muse on) themselves as objects. Individuals can evaluate, argue with, understand, even misunderstand themselves. Additionally, individuals can see themselves (correctly or incorrectly) from the perspective of another person and include those perspectives and perceptions within their own conceptualization of their self-identity, of their own self-concept.
For interactionists, identity is shaped by the reciprocal relationship between the individual and society. Society provides the structure [the symbols of symbolic interactionism] through which individuals interact within society; it supplies the language and the structural meaning that permits role taking, engagement in social interaction and reflection upon oneself as an object. Self always acts within a social structure; self cannot act outside the conformation of social structure. Role taking and all individual actions exists within a full context of patterns of actions, interactions and resource transfers.
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