The founder of SYSTEMIC FUNCTIONAL THEORY, M.A.K. Halliday,
characterizes its origins as follows in his entry on
"systemic theory" in the Encyclopedia of Language &
Linguistics (Pergamon Press):
Systemic, or Systemic-Functional, theory has its origins in the main intellectual tradition of European linguistics that developed following the work of Saussure. Like other such theories, both those from the mid-20th century (e.g. Prague school, French functionalism) and more recent work in the same tradition (e.g. that of Hagège), it is functional and semantic rather than formal and syntactic in orientation, takes the text rather than the sentence as its object, and defines its scope by reference to usage rather than grammaticality. Its primary source was the work of J.R. Firth and his colleagues in London; as well as other schools of thought in Europe such as glossematics it also draws on American anthropological linguistics, and on traditional and modern linguistics as developed in China.
Its immediate source is as a development of scale-&-category grammar. The name "systemic" derives from the term SYSTEM, in its technical sense as defined by Firth (1957); system is the theoretical representation of paradigmatic relations, contrasted with STRUCTURE for syntagmatic relations. In Firth's system-structure theory, neither of these is given priority; and in scale-&-category grammar this perspective was maintained. In systemic theory the system takes priority; the most abstract representation at any level is in paradigmatic terms. Syntagmatic organization is interpreted as the REALIZATION of paradigmatic features.
This step was taken by Halliday in the early 1960s (1963, 1965), so that grammatical and phonological representations could be freed from constraints of structure. Once such representations were no longer localized, they could function "prosodically" wherever appropriate. The shift to a paradigmatic orientation added a dimension of depth in time, so making it easier to relate language 'in use' to language being learnt; and it enabled the theory to develop both in reflection and in action -- as a resource both for understanding and for intervening in linguistic processes. This potential was exploited in the work done during the 1960s on children's language development from birth through their various stages of schooling.
FOR FURTHER INFORMATION, the following information sources maintained by the Systemic Modelling Group at Macquarie can be consulted: