(The following is from the paper I read at the annual ETS meeting last week. The entire paper can be downloaded from BillMounce.com/papers.)
Much of the current misunderstanding about translation theory is due to putting Bible translations in the wrong category, or putting two translations together that should be kept separate. I believe there are five, not two or three, categories of translations, and critiques specifically of the NLT (“natural language”) should not be applied to the NIV (functional equivalence”).
The category of “literal” translations should only include interlinears, and in fact I don’t like the term “literal” at all since we use the word in a way that is contrary to its actual meaning. The word “literal,” in any English dictionary, literally means “without embellishment,” and it should never be used in a discussion of translations.
There is no such thing as a literal meaning of a word — what does λόγος “literally” mean? — no such thing as a literal translation of a verse, and therefore there is no such thing as a “literal translation” or even an “essentially literal” translation. Even interlinears are technically not literal but are, to some degree, interpretive. The minute you translate τοῦ θεοῦ as “of God,” you are no longer literal but interpreting a genitive noun construction with a prepositional phrase and dropping ὁ, a word that actually has no precise equivalent in English.
No competent translator should say that their translation is literal. The problem is that the folks in our churches mistakenly equate “literal” with “word-for-word” and think that means “accurate.” It is our responsibility to help people see the error in this thinking. [See Van Leeuwen on the KJV. “I prefer not to call it ‘literal’ because translations always add, change, and subtract from the original. The only literal Bible is written in Hebrew and Greek” (“We Really Do Need Another Bible Translation,” Christianity Today, 45 no 13 (October 22, 2001).]