From 1967's Hustlers, Beats, and Others by Ned Polsky:
[Beats] resent any label whatever, and regard a concern with labelling as basically square. But insofar as they speak of themselves generically and are forced to choose among evils, they prefer the word "beat." Until recently "hipster" meant simply aone who is hip, roughly the equivalent of the beat. Beats recognized that the hipster is more of an "operator"--has a more consciously patterned ifestyle (such as a concern to dress well) and makes more frequent economic raids on the frontiers of the square world--but emphasized their social bonds with hipsters, such as their liking for drugs, for jazz music, and above all, their common scorn for bourgeois career orientations. Among Village beats today, however, "hipster" usually has a pejorative connotation: one who is a mannered showoff regarding his hipness, who "comes on"" too strongly in hiptalk, etc. In their own eyes, beats are hip but are definitely not hipsters.
Although beats are characteristically ignorant of history, even of their own history, most know the oft-discussed origin of "beat" as applied to the postwar disaffected but all are in the dark about "hip." The few Village beats with any opinion suppose that it comes from the "hep" of early 1940's jivetalk. Actually "hep" and "hip" are doublets; both come directly from a much earlier phrase, "to be on the hip" to be a devotee of opium smoking--during which activity one lies on one's hip. The phrase is obsolete, the activity obsolescent.