In the history of psychology, James's theory of mind is called functionalism. James had established an international reputation in psychology before his main focus turned to philosophy, and many of his philosophical views have their roots in his psychological studies. James starts from a Positivist viewpoint, that is, from experience, which for him is established by psychological facts . The psychological facts make their appearance as an undifferentiated stream. In this psychic stream the mind makes a distinction between subject and object, sensations and concepts.
Concepts arise out of the necessity of organizing the confused facts of experience.
The value of concepts whose practical consequences have not yet been experienced scientifically, depends upon the will. Thus between two hypotheses, neither of which can be tested scientifically, the choice is made by the will on the basis of utility. Thus our choice must be made in favor of the second hypothesis. James considered pragmatism to be both a method for analyzing philosophic problems and a theory of truth. He also saw it as an extension of the empiricist attitude in that it turned away from abstract theory and fixed or absolute principles and toward concrete facts, actions, and relative principles.