Material mind:Biology of imagination?
Here's an interesting article by Simon Baron Cohen that tries to find a biological basis for imagination. He focuses on the ways in which small children readily learn to "make-believe."
But when it comes to biology, he doesn't get far beyond noting that autistic children don't have much imagination. For example, they don't attempt to determine and react to what others are probably thinking. Therefore, he concludes, imagination must be a "special piece of hardware":
Since the disability that comprises classic autism is biological in origin, then children with autism are offering us a big clue about the biological basis of the imagination. Of course, when the meta-representational hardware develops normally, biology has done its job. From then on, the content of our imagination, whether we imagine an angry god or a school of wizardry, a mermaid or a devil, owes more to our specific culture than to biology. But the capacity to imagine depends on genes that build brains with a very specific kind of mechanism - one that we take for granted whenever we form relationships or fantasize.
Make-believe is certainly intriguing. I have told stories to children for over forty years, and have never encountered a child over three years of age who had any difficulty whatever distinguishing "story reality" (e.g., talking cat fools dim-witted dinosaur) from "real reality" (dinosaurs are extinct and cats do not talk). It is indeed remarkable how quickly children can learn, for the purpose of amusement, the "rules" of the storyteller's alternative world and distinguish them without effort from the rules of the common world we live in.
But, given that the brain is a tossing sea of interacting neurons, I find the quest for "hardware" that enables imagination remarkable - but doubtless entirely suited to materialism.