Chomsky stressed that if military research were to take place anywhere in society, it should be in universities. (See his Language and Politics, p216-7.)

Chomsky made this argument while major student unrest was occurring at MIT. One of his talks that referred to this was entitled 'The Function of the University in a Time of Crisis'. It is reported that radical students in the audience of this lecture were 'surprised' and 'dismayed' by Chomsky's stance.

Here are two reports from the 30 December 1969 editions of, first, The Boston Globe and, then, The Los Angeles Times:

When Chomsky had made a similar argument around the time of the 1968 Columbia University occupation, many students were equally 'surprised':

Faculty Group Holds Forum on the Nature of the University. (May 13 1968)

The Independent Faculty Group, one of the many bodies which is now developing proposals for the reorganization of Columbia, held the first of a series of discussions Friday evening on the nature of the university.

Earlier Friday the group released a statement calling for ‘a form of discourse less concerned with the punishment of persons and more with the task of understanding and evaluating their behaviour in social and political settings not anticipated by previous disciplinaryprocedures.’

The forum did not address itself directly to the disorders of the past few weeks, but was concerned with the larger concepts of the university that have been the context of political activity here during the crisis.

Associate Professor of Philosophy Robert P. Wolf, after discarding the Marxist view of the university as a ‘capitalist corporation’ and the Clark Kerr model of the university as a ‘social service station’ presented what was obviously his and the audience’s conception: the university as a ‘community of learning’. According to this construct, Professor Wolf explained, the faculty and students literally are the university, while the administrators are their servants.

‘We must decide collectively to act as a university’, Professor Wolff declared. ‘The administration and the Trustees will have no choice but to accede to our conception of a university’. Noam Chomsky, professor of philosophhy at the Massachusetts Institute of Technology spoke later in the forum after Stuart Hampshire, Professor of philosopohy at Princeton, and Peter Gay, Professor of History. Professor Chomsky, who is a supporter of the Resistance, surprised many in the audience by dissenting from radical arguments in vogue at Columbia.

‘The defects of universities are marginal,’ Professor Chomsky said. ‘Not all the problems of the world are problems of the university.’ The failings of universities are generally the faults of individual members and not of the institutions themselves, Professor Chomsky told the audience. The responsiveness of administrations is usually high, he said, and the opportunities for self-expression are great.

‘Professor Chomsky stated that no gain would result if the Institute for Defense Analyses were forced to leave university campuses. He claimed that the main problem was changing people’s ‘consciousness’ about the war. ‘My task is to change the opinions of those who do war research’ Professor Chomsky said. The only other way of stopping them from working for agencies like the IDA he observed, would be to kill them.

The university is inherently a ‘parasitic institution,’ Professor Chomsky stated. The way to overcome the danger of outside control is by ‘fostering values of academic freedom.’
— Columbia Daily Spectator. New York. Monday May 13 1968, pp. 1, 4.