Have you had a good time this Christmas with plenty to eat and drink and expensive toys for the children? Do you look forward to similar festivities on New Year's eve? Do you feel guilty about indulging yourself amid all the headlines about austerity? Well don't. Bear in mind the complaint of Alice: "Jam yesterday, jam tomorrow but never jam today."

A single individual or family cannot, of course, be a substitute for a sensible economic policy; and you have no duty either to indulge or to save and scrimp for the sake of the national economy. But insofar as you are influenced by patriotic considerations, then do indulge. And if you feel guilty about indulging when other people are going without then use your surplus cash to help poor families to indulge as well. If you don't know any such families, or cannot trust yourself to give without appearing condescending, then donate to a carefully chosen charity. In normal times a sound maxim is: "If you give a poor man a fish, it will help him for a day or two; if you give him a fishing rod you set him up for life." But with the world hovering on the brink of a second recession or worse, there is something to be said for charities that actually dispense spending money fairly quickly.

This seemingly paradoxical argument was best stated by Bernard Mandeville, an early 18th century English physician of Dutch origin, in a parable entitled The Fable of the Bees in which he depicts the fate of a prosperous community in which all citizens take it into their heads to abandon luxurious living:

Now mind the glorious hive, and see
How honesty and trade agree:
The shew is gone, it thins apace;
And looks with quite another face,
For 'twas not only they that went,
By whom vast sums were yearly spent;
But multitudes that lived on them,
Were daily forced to do the same.
In vain to other trades they'd fly;
All were o'er stocked accordingly.
The price of land and houses falls ...
The building trade is quite destroyed,
Artificers are not employed ...

This work was denounced from the beginning. It was convicted as a nuisance by a Middlesex grand jury in 1723 and was condemned by respectable opinion for the next two centuries. Only that old Tory Samuel Johnson had a good word for it, saying that it "opened his eyes into real life very much".

Mandeville's doctrines were revived by Keynes under the title the "paradox of thrift". To take matters further, it is helpful to start at the other end and look at what happens when a nation takes up spending rather than thrift. A useful starting point is a hoary examination question: a traveller arrives on an island which has just started to use money, but has the good fortune to lack a sophisticated banking system. He buys a restaurant meal and pays by cheque. The inhabitants are so impressed that it goes from one trader to another without being cashed. Who paid for the meal?

For a long time the orthodox answer was something like this. If the islanders were already fully employed, there would be a slight increase in the inflation rate and the real cost was shared among the islanders. If on the other hand, there were unemployed resources the circulation of the cheque would lead to a slight increase in general prosperity and in effect no one paid.

Hayek, the free market economist, rather spoilt the party with an informal review of Keynes's general theory towards the end of an obscure volume, The Pure Theory of Capital, published in 1941. Hayek pointed out that real world economies were rarely either in a state of full employment or generalised unemployment, but somewhere in between. Milton Friedman almost completed the argument by positing a "natural rate of unemployment". If official policies tried to push unemployment below this rate the result would be accelerating inflation. This was sanitised by being renamed the non-accelerating rate of unemployment and later still replaced by the anodyne sounding "output gap".

James Livingston, an American historian, goes beyond Keynes in his new book, Against Thrift. Even apart from recession conditions, he sees no social virtue in thrift, mainly because reinvested profits can provide all the new capital required in the modern US economy without the need for net new investment, financed by saving. He has an appendix by two economists more or less substantiating the point. The main text is somewhat diffuse; and a large part is devoted to defending the "consumer society" against the strictures of left and right. But it is worth a look if only for the account he gives of early 20th century US populist leaders and writers, hardly known outside the US. Among them was Samuel Gompers, the founder of the moderate wing of the American trade union movement. Denis Healey, the former Labour chancellor, used to play with the conceit that I was named after Gompers, of whom my parents had never heard. But at least I now know that he favoured a high-consumption economy.