This paper defends the idea that universities manufacture knowledge as a public good through the “creative destruction” of social capital. The idea is presented as contemporary restatement of the Humboldtian ideal of the unity of research and teaching: Research “creates” (i.e. concentrates) social capital, which is then “destroyed” (i.e. distributed) through teaching. The defense is made against recent attacks to the integrity of the university as an institution associated with postmodernism and the so-called “new production of knowledge”, which would evaluate universities by client-led performance indicators. The emergence of such indicators is considered and critiqued, followed by some constructive suggestions for indicators specifically designed to measure qualities at which universities uniquely excel.