The concepts of the inner and outer self taught by the new church are completely different, however. In this view, our inner self is our will. It is the source of the thoughts we have when we are left to ourselves, such as when we are at home. Our outer self is what we do and say in company or in public. Our inner self, then, is goodwill and faith—goodwill that belongs to our will, and faith that occupies our thoughts.
Before we undergo regeneration, goodwill and faith constitute our earthly self, which is divided into an inner and an outer level. This is clear from the fact that we are not allowed to act in company or in public the way we do when left to ourselves at home. What causes the split into an inner and outer level is that civil law prescribes punishments for those who do evil things and rewards for those who do good things. Since no one wants to be punished and everyone wants to be rewarded, we therefore force ourselves to create an outer self that is separate from our inner self. The reward takes the form of wealth or a good reputation; we achieve neither one unless we live according to the law. This is why morality and benevolence are practiced outwardly, even by people who have no morality or benevolence inwardly. This is the origin of all hypocrisy, flattery, and pretense.
from True Christianity, Section 592