Are language models developing real functional competence or just formal competence?

Fedorenko and colleagues (Dissociating language and thought) ground the LLM competence debate in neuroscience. Formal linguistic competence — knowledge of linguistic rules and patterns, grammatical structure, syntactic regularities — relies on dedicated language circuits in the brain. Functional linguistic competence — understanding and using language in the world — requires integration of diverse brain networks beyond language circuits: memory, reasoning, social cognition, sensorimotor systems.

The critical finding: word-in-context prediction, the training objective of most LLMs, produces formal competence as an emergent outcome. It does not and cannot produce functional competence, because functional competence requires the integration of systems that are architecturally distinct in the brain and not activated by the prediction objective.

LLMs are "qualitatively different in their formal linguistic capacities from models before roughly 2018" — a genuine discontinuity in formal competence. But this formal competence arises from an objective that leaves functional competence behind. The two competences are not on a continuum; they are served by different mechanisms.

The predictive implication is architectural. Models that succeed at real-life language use will need to mimic the division of labor between formal and functional competence in the human brain — through modularity: separate circuits for form-level processing and for world-connected functional processing. LLMs that add retrieval, tool use, and memory may be approximating this modularity, but from the outside rather than by design.

This is distinct from Bender & Koller's claim that meaning cannot be acquired from form alone (which rests on the joint-attention/communicative-intent argument). The Fedorenko finding adds a mechanistic neuroscience foundation: even if we grant that some meaning can emerge from distributional learning, the kind of competence that requires world integration is neurologically segregated and cannot be produced by the same mechanism as syntactic pattern-learning.