Here is The [slightly annotated] Wit and Wisdom of Brian Arthur:

At the end of April, as the Microsoft case approached a new climax, Professor Arthur gave an interview with PreText magazine editor Dominic Gates. For the first time in a public forum he spoke extensively about his theories, his critics, and the Microsoft case.

[Jumping to 'his critics']

Gates: Is the theory of increasing returns still controversial?

Arthur: Absolutely not. This is now completely taken for granted in Silicon Valley. I don't have to go around California telling the Marc Andreesens of the world or the Andy Groves of the world that there are increasing returns. Intuitively, the smart people in high tech knew this all along.

Gates: Do you think Bill Gates realizes this?

Arthur: Absolutely, and has done for a long, long time, independent probably of any academic theories.

I don't know anyone who would describe themselves as a market capitalist, as a typical business person, who would find increasing returns threatening. On the contrary, what we're finding is that these are a body of theories that resonate very deeply with their own intuitions. Folks at Sun Microsystems, or other places, are using these theories. Sun used my theories to launch Java. In return they gave me a high end Sun workstation.

And all the academic battles about increasing returns were over around 1990. That's when the controversy stopped over whether it was correct, and the controversy started as to who had thought of it first.

Gates: So you don't see these ideas in opposition to classical economic theories, the Chicago school?

Arthur: Not at all.

However, some people who are great proponents of Chicago neoclassical economics seem to get uptight every so often in the opinion pages of the Wall Street Journal. The source of the problem is that if I say that markets can lock in to one product or one company, not necessarily the best, [note how he forgets this part of his story a few paragraphs down] then that's taken as a threat to the whole ideology of capitalism.

The only controversies are ideological ones. I think it's inevitable that any important theory, or any new theory of any importance, does have a trail of flat-earthers behind it, a trail of creationists; people who won't get it and don't get it, for one or other ideological reason.

So there is a rearguard battle being fought between academic economists and, how shall I put it, capitalist ideologues. Two or three years ago the Economist magazine, which can be quite ideological, seemed to be negative towards these ideas. Now it is no longer denying any of this.

Gates: And the Wall Street Journal?

Arthur: Well, the Wall Street Journal itself has story after story of increasing returns and the dynamics of these market. Only the opinion page of the Wall Street Journal is a lagging indicator of economic thinking.

Gates: So these theories are no threat to capitalism?

Arthur: On the contrary. Markets operate according to diminishing or increasing returns. Those are just like the laws of physics. Markets operate the way they do. Capitalism is a structure that's built on top of those markets, and it seems to me that standard capitalism of the sort that we have now does very well indeed under increasing returns.

But it does tend to make [the more] highly open capitalistic markets, as there are in high tech, seem to be somewhat more unstable. People in high tech know that you can lock-in a market almost before it starts. I don't think that is a threat to capitalism, but it makes for a less leisurely capitalism. And it makes for maybe more intense competition.

Gates: Let's talk about some of your critics. Stan Leibowitz and Stephen Margolis have written a critique, which was the subject of a recent story in the Wall Street Journal [note: this story was not in the editorial section but in the same section that had previously run a flattering article on Arthur.] They claim to debunk the historical basis of path dependence theory, specifically the famous QWERTY story [that the familiar QWERTY arrangement of the keys on a typewriter was deliberately designed in the 19th century to slow typists down, because early manual typewriters tended to jam. Once typewriter manufacturers were locked into QWERTY, an alternative design that allowed faster typing failed to supplant it.] Leibowitz and Margolis call this story a "fable" and the Wall Street Journal refers to it as an "urban legend."

Arthur: It is perfectly demonstrable that we are indeed locked into a single QWERTY keyboard. There are legions of examples of lock-in. I'm not sure even Margolis or Leibowitz would deny that.

Gates: Right. But what they were saying was that it wasn't an inferior technology that locked in, and that the historical story which claimed it to be so was simply not true.

Arthur: It's absurd to think that any theories of increasing returns hinge upon whether QWERTY is better or worse. That is nonsense.

If you shine the appropriate light on it, you could demonstrate that under certain circumstances something that locked in -- like QWERTY -- wasn't so bad after all. I don't know anybody who is saying QWERTY is wonderful, but it's not clear to me that QWERTY is that great.

Take another example in the Wall Street Journal article: Microsoft DOS. I know of no independent computer scientist who thinks that DOS was a wonderful operating system, even when it was produced, though you can find ingenious ways to show that it was in some strange sense superior.

Gates: Well, they claimed that DOS beat out Apple because it was cheaper.

Arthur: One can take anything that locks in and at the time it locks in, normally it's better; that's why people are buying it. It's more convenient, or it's out there, or it's what you run across. But the point is that there could have been something else that might have locked in that, in the long run, may well have been better.

Not so long after DOS came out, the Macintosh [operating system] was demonstrably better. I think that Microsoft itself has acknowledged that fact by designing Windows to look just like it. And if people are saying, "Yes, but DOS was cheaper", well, think of all the wasted hours trying to use the damned thing. In computer science circles, DOS was a joke.

As far as I can see, the Leibowitz and Margolis arguments are ideological arguments for the far right. [Presumably Hitler himself would have liked our arguments.] I don't see that there is a debate on increasing returns. You can have a debate as to whether what locked in might, under certain lights you shine on it, actually be better than what was locked out. You can make a case that gasoline engines are better than any alternative could have been. But frankly I don't know how to settle that, because you're talking about what might have been versus what is.

Gates: These theories are often discussed via particular examples or counter examples. One that you have cited is VHS versus Beta Max. Leibowitz and Margolis say that there was a good reason why VHS won: VHS tapes could record longer. And so, there was a reason why it locked in; it's not an example of path dependence.

Arthur: It is an example of path dependence.

The question of whether the product at the start was better or worse is moot. Yes, people may adopt VHS because it has a longer recording time. But the point of increasing returns is that if it gets ahead it locks in. Not what is better or what is worse. That's only a point for ideologues and the back pages of the Wall Street Journal. [Putting us in our place.]

Gates: But isn't an important part of your contribution your pointing out that things that get locked in aren't necessarily the best? It's not just to demonstrate lock-in, but to demonstrate lock-in of something that wasn't good for consumers. [this is just repeating what Arthur himself had said a few paragraphs ago]

Arthur: Well, again, you only get excited about that if you belong to the right wing of American ideology.

This notion that the market is always wonderful and perfect is a right-wing ideological idea. [Can you say the words 'Ad Hominem'?] People don't expect that all the friends they have are the most optimal friends. People get married; sometimes it's wonderful and sometimes it isn't. Lock-ins occur; sometimes for the best, sometimes not.

The theory doesn't say that what locks in has to be inferior. The theory says that it's not necessarily superior. [Is this what we mean by a difference without a distinction? And that is the empirical question - are there any cases where a 'not necessarily superior product', which to normal human beings includes inferior products, wins.]

Gates: That same Wall Street Journal article concluded that there is "an emerging consensus . . . that the path dependence school has yet to come up with the smoking gun it needs to show the market-place locked into a manifestly inferior technology."

Do you have a smoking gun for increasing returns?

Arthur: I find I'm puzzled by all of this [you can say that again] because it's a bit like debating evolution with creationists: "But if you believe in evolution, the inference is that angels must have evolved their wings, and that would upset all of theology." [This is the ultimate put-down; being compared to a creationist far far worse even than being called a right-wing ideologue.] For me it's moot. The onus isn't on me or anyone else, to show that we're locked in to any inferior thing. [Why should he have to prove that anything he says is true? Is he supposed to be a scientist or something?] The onus is on the opinion page of the Wall Street Journal and the libertarians to show that all things that we're using in the economy are not just the best they could have been at the time, but are the best that could possibly have emerged. [So let me understand this. He has a theory whose only novel component is saying that we might get stuck with second rate products, but it is not up to him to show that it is ever true, requiring but a single case, but up to his critics to demonstrate that it is always false, requiring an infinite number of cases.] Nobody in computer science believes that about DOS. As for the QWERTY keyboard, if Margolis and Liebowitz can prove it's the best, my hat is off to them.

Gates: Let me throw at you some more of these free enterprise think tank critiques of your theories. Clyde Wayne Crews went beyond saying that lock-in to inferior goods was a myth; he claims that lock-in is a myth. The examples he cited were: color TVs did supersede black and white; CDs did replace vinyl records. In another piece, Robert Levy of the Cato Institute, added a couple more examples: Word Perfect once looked unassailable as a word processing product; Lotus 123 once had no competition in spreadsheets. All of those actually failed to lock in and exclude the competition.

Arthur: Not at all. They all locked in, but then the next wave of technology took over. We were indeed locked in. [We are locked-in, except when we aren’t. We could use some definitions here.]

The fact is, technology comes in waves. No one I know who talks of increasing returns says that lock-in is forever. We are locked in to English, temporarily. In 500 years time it'll be a different language. Three-hundred years ago people were locked into Latin as the international means of discourse. No one said a lock-in is forever. In fact, it's taken for granted in high tech that lock-ins typically last anywhere between a year or two and five years.

Let me give you a very specific example here again. Netscape, as you know, had a heavy lock-in in the browser market. And it wasn't dislodged by means of a new wave of technology: no new software product came along to supplant the browser; instead it was steamrollered aside by the Microsoft juggernaut, Internet Explorer.

Gates: [Pointing out Arthur's characteristic hyperbole.] But it hasn't exactly been steamrollered out of the way. It still actually has a bigger share of the market than Internet Explorer.

Arthur: Well, you can certainly claim that its lock in isn't as heavy as it was two years ago. I'm just saying that a lock-in is only good until the next wave of technology, until the game changes. And even if the game doesn't change -- it didn't with the browser market -- if you have enough guns, you can dislodge the lock-in.

Gates: [trying to figure out what Arthur could possibly mean by lock-in] Isn't lock-in just another word for standardization? Britain and the U.S. drive on different sides of the road. Wouldn't it be better if they both drove on the same side and you only had to make one kind of car? Similarly, the European Union has a single cell phone standard and the United States has three incompatible technologies.

What's wrong with standardization?

Arthur: Increasing returns are about the dynamics of markets. If a market locks in to something, it's not necessarily the best; on the other hand, as you were saying, there may well be advantages to locking in to a single standard. So any theories of increasing returns aren't necessarily pro- or anti-Microsoft. Under increasing returns, you can lock into a single standard and that might have enormous advantages.

Judging the pros and cons of increasing returns markets is case specific. Let me give you one example. If a market, say, software, locked into a single standard, say, Microsoft Windows/Explorer, you could argue that there's some advantage to that. It would be like having a single railway gauge all the way from Calais to Moscow a hundred years ago, so you didn't have to change trains at each border.

So my answer is yes, there are many advantages to increasing returns, and certainly one of them is that we can use a certain standard. Basically the entire Internet is the result of a telecommunications/computing standard: TCP/IP. The existence of that standard made the World Wide Web possible. So yes, there are advantages in standardization.

Increasing returns are in a particular industry. They're either present or they're not. I want to get my point very clear on this. Increasing returns have to do with how markets work. Whether that is good or bad is somewhat case specific. [Except that he can't find any cases where it is bad that turn out to be true]