The Emperor's New Clothes: A Manifesto for Universities in an AI-Haunted World

Universities face an existential crisis revealed, but not caused, by artificial intelligence. Using Lakatos' Philosophy of Science, we argue higher education has become a degenerating research programme, maintaining formal structures while abandoning educational substance. Drawing on evidence from an experimental AI-integrated unit at Macquarie University, we pose three interlocking questions: What constitutes content-increasing education when AI handles information transfer? How can universities reconnect education to meaningful world-making? What academic practices enable transformative rather than transactional learning? Student transformations documented in our unit suggest design principles for post-transactional universities that embrace productive failure, reward process mastery, and develop new capabilities beyond credentialism.