A Narrative Process
This is just a quick attempt to summarize Jaynes' account of the origin of consciousness. Note that it has been over a year since I read the book; this summary is inevitably colored by what I took from my reading. I recommend reading the book to get a better, fuller picture of what Jaynes has to say. (And for a better defence of his ideas. I am not defending the ideas here but merely putting them in a nutshell.)
With the development of language comes, eventually, the ability to self-narrate. After people have been using words for a long enough time in building questions, declarative sentences, and orders, they will happen on story-telling, which contributes to the development of a complex syntax. As this syntax is internalized, and with it the notion of a story, people can start to think, as they are tending their garden, "I am tending my garden." "I am harvesting vegetables which I will cook to feed my children." -- As this narration of personal actions and intentions becomes a running internal monologue, it becomes what we call consciousness.
Consciousness is the narration of an "internal space", the ability to see ourselves as actors in an external drama; to give names to our relationships with other actors and to describe our strategies for dealing with them. As this process becomes more sophisticated we gain the ability to interact with our selves, that is, to see the narrating voice as an actor in this drama and to form relationships with it.
Update: see the blog for more...