The economic downturn rolls on: the 200 year old firm Wedgwood has gone into administration, Woolworths has finally shut up shop with the loss of 27,000 jobs, and 1,000 staff are apparently to be shed by Marks and Spencer. In the parlance of our American cousins, what started on Wall Street has now hit Main Street. Happy New Year!

The UK Government's recent fiscal stimulus package, including a 2.5% cut to VAT, is an attempt to encourage consumers to spend more where otherwise they might be cutting back: "The economy needs more spending," wrote one commentator, "so why not cut the biggest tax on spending?" One obvious response is that the stimulus package has not worked – major retailers are still going into administration and jobs are still being lost. Another way to frame the problem is that consumers have not responded to the fiscal stimulus package in the way the government hoped – they are not taking the extra money and spending or investing it but instead, like the financial institutions at the heart of the present crisis, the public has taken the more cautious approach of 'rebuilding balance sheets'.

Interviewed before Christmas on the Today programme, the Archbishop of Canterbury made yet another intervention into the public debate on the economy. He complained that stimulating spending in and of itself was not the right path: "I worry a bit about that – it seems a little like an addict returning to the drug... spending itself is about need before it's about serving the economy in the abstract... [people should] spend for good human reasons." Far from the old style Marxist that the Archbishop has given the impression of being in recent months, it seems that he is essentially advocating not a remodelled economic system but a moderated market economy. The nexus of human activity we call the economy exists to meet the needs of the community, and participation in it based on that is a human good. There are, then, good and bad reasons to spend.

Consumers could react to the present financial crisis by shutting up shop: hoarding, scrimping and saving, and no doubt it would be wise for many to do so. But it would not be wise for all to do so – just as there are good and bad reasons to spend there are good and bad reasons to refrain from spending. Fearful and panicked hoarding of resources is not the proper corrective to a profligate and indebted economy.

The 'good human reasons' that the Archbishop refers to include what he calls the 'economy in abstract', the system in which people run businesses, hold jobs and lend capital. Those with money have a moral obligation not to hoard, but to spend.

Paul Bickley is Senior Researcher at Theos