Is the diminishing returns in the room with us?
>so all the labs are pivoting to specializing in particular fields like math / infosec / biology.
They're not pivoting to anything. The goal has always been creating a machine that could automate all or nearly all human work. They're just coming along on that mission.
As for RSI...I think the term is a bit odd in the modern context. It was created at a time when conventional wisdom was that generally intelligent machines would be these logic automatons that could "alter their own code". Instead we have massive neural networks that take months to train.
In this paradigm, the ways a LLM could "improve itself" would be altering its own weights directly or creating and training better, vastly more efficient architectures for the next generation of models.
The former is probably not happening but the latter is possible.