“There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
These words were written by Milton Friedman in 1962 and repeated in his famous 1970 New York Times essay. Much of the corporate world eventually followed this principle almost blindly. But over the years, as its costs have started to emerge, the naysayers have increased in number.
We hold shares in companies and celebrate the gains when these businesses, guided by this principle, squeeze a little more out of their employees (or fire them), or when a secondary market that often has little to do with company fundamentals rewards us for having trusted our wealth to it. At the same time, we criticize these same companies in our alternate role as humans who care about what happens to the other stakeholders...the workers, the supply chain members, and the planet. I don’t know if that is us pretending to care or if it is one of those me vs. the world trade-offs that showcases our hypocrisy.
Kher, I work in academia, and we are above all these worldly pursuits. Or so we say. Much of what we do is about expanding young minds. To teach students to become lifetime learners. To set them up for success. That is our primary goal. We are not about teaching them skills to help them find jobs. That is what vocational colleges do.
But at the same time, universities talk about ROI on education. They talk about job placements, and this is not just business schools but other departments too. So it gets a little confusing. Maybe they are a blend of the two…high-end vocational institutions that also help students learn to think!
But this new toy known as GenAI has come in and messed things up. It promises to help increase productivity. Yay! That means we can have fewer people doing more work. That is a win-win...or maybe a win-lose. A win for the shareholders and a loss for the employees who are getting more work. It is an even bigger loss for the group more unfortunate than the ones with more work: the ones who got no work! So obviously, businesses have rushed to embrace this technology. More money, more happy shareholders.
What makes this situation absurd is that GenAI companies and experts in the field are warning us that the technology poses a very real risk of going rogue and destroying society. This is just an upside-down world, and it does not make sense. Can you imagine if the weapons, oil and gas, and tobacco industries openly said, “We sell our products and make loads of money, but you should know that these can kill you or the planet”? At least these industries are kind enough to play the game, hide the research, and pretend that their products are good for us.
What world are we living in where CEOs talk about the destruction of humanity but refuse to slow down? This honesty is not something we are used to. Is there no decency left?
Unless, of course, the honesty is the marketing. “Our product is so powerful it may end the world” is also a valuation pitch, and a convenient moat if regulators end up licensing only the responsible doomsayers. So we get two possibilities. Either the warnings are true and we are insane to keep buying, or the warnings are theater and we are the marks. Neither one is flattering.
What makes this even funnier is that, in the tradition of Pavlov and his favorite animal, we are so conditioned to accept addictive products that we, the people, have taken on the task of denying the claims the companies are making. Slow down for a moment and think about it. The company that produces a product is telling us that the product carries the risk of destroying us, and the consumers are arguing that the company is lying and the product is safe. Are the people now the unpaid PR division for these companies? I have no idea what is happening anymore.
And this is the moment when academia has the opportunity to step in and be the responsible adult in the room. We are about teaching inquiry and learning. Skills may be a by-product. In the tradition of being cautious gatekeepers for society, we can resist the lure of GenAI and first collect data to see what the true cost of this technology is.
The early evidence on cognitive atrophy is mixed, but enough of it is pointing in an uncomfortable direction. Surely the burden of proof should sit with adoption, not with caution. We failed to protect kids from social media, and we now have a generation of kids who are paying the price. This is our chance at redemption. I am sure academia will be the voice of reason. We are educators. We deal in knowledge, and knowledge does not play by optimization models.
But what do we see?
We see academics rushing to adopt GenAI and celebrating it. For a sector that asks for years of data before making the smallest decision, we are rushing headfirst into a technology that its creators are warning us about. Why?
Go back to Friedman. Universities stopped being above worldly pursuits a long time ago. We price our product in ROI. We advertise placement rates. We call students customers when we think no one is listening. We are also Friedman firms, just wearing better masks. And when a productivity tool shows up, a Friedman firm adopts it. That is not a betrayal of the mission. That is the mission, finally visible.
And how can I be sure? We see firms embracing AI because if they don’t, their competitors will do it. The AI firms argue that if they don’t develop the terrifying technology, other AI firms will. And now, universities are doing exactly the same. They are afraid of getting left behind because the other places will become “leaders in AI” and own innovation in their brochures. We do not need a PhD in game theory to see how this ends. The competition does not make universities firms. But the fact that they justify their choices in exactly the same way tells us which logic now governs them.
This technology is creating a separation between the knowledge function and the skills function. With cognitive atrophy on the table, we cannot argue that AI will make students better thinkers. It may make them more efficient employees, but not smarter people. And sadly, academia is standing on the wrong side of the table, coming out as a job-placement optimization industry.
Will the adults in the room please stand up? Or maybe there were never any.