How do you (anybody) think language and the diversity of language came about?
I think that language first developed inside of the mind as a means of thinking, and that it later became put to use for communication. At first, it was probably a form of sign language, since I think that language came about long before the physical features were in place to 'speak'.
There is no means to think without language. I believe that during the early periods of our evolution, those critters born with a more advanced concept of this 'language', would be able to think better. At some point, the better 'thinking' (through the generations) would become advanced-enough to where it was able to out-do the meagre brain of the early creatures; that is, the use of the thoughts would begin pushing at the limits of the brain's capacity. At this point, then, it would seem that we would get the beginnings of ”higher functioning’ brain selection through evolution. In other words, selective advantage for the bigger brain would begin at this point, because thought itself would give rise to a need for the bigger brain in order to supply the higher processing power required for thought itself.
Try this neat test: Close off your brain and stop all the words that are running through your head. Remove yourself to an environment where there is no language entering into you. Remove all language completely from your life for just a few minutes.
If you do the test I mentioned above and remove language from your world for just a few minutes, you will see that most of your brain goes completely unused without language. It would seem to me, then, that the larger brain would not be selected for if it were not also able to be fully utilized. This is because evolution tends to work things down, especially things like brain and head size. As it is, our brains require massive amounts of energy, and before modern medicine, the passing of the large head was the major risk in childbirth, and many women died as a result. So, there has to be a reason for selecting the larger brain. Since we see that all that extra brain has no purpose and is useless without language, it would seem that there had to be a language present that was the driving force behind larger brain selection. Evolution doesn't select for larger non-functioning organs, it usually reduces them. So, we need to assume that it was functioning, and the only way we know of for the additional capacity of the brain to actually function is on language. Otherwise, you have a mostly non-functioning organ that just keeps increasing for no reason until one day: BAM, language... seems silly. Now, at what point the 'internal' language actually became externally used for communication, I haven't a clue.
As for the story about Babel: simple fairytale.
Jon
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Note, I use 'bigger', but technically, I mean 'higher powered', since that's what really counts.