Although Tolkien's novel begins in the Springtime and ends in Midsummer, it is pure Christmas. It begins with overwhelming numbers of unexpected visitors and much consumption of good food and drink, and ends with a cascade of present-giving.

"Dragon-sickness" - the lust for gold and material goods - strikes not only children at this season. Indeed, recent years have shown up the greedy hoarding of money, houses and yachts among the rich in a manner reminiscent of Smaug's bewildering "glamour": some earn salaries many times larger in proportion to other workers' wages than in earlier times, while making us all believe that their value in the market dictates and thus justifies this obscenely large remuneration.

The Hobbit is a story which shows that it is not just the rich who become enthralled by the glitter of wealth, but also the dispossessed. The great dwarf craftsmen in metal who are on a quest to regain their stolen gold are possessed by "a fierce and jealous love" for it. Even Bilbo the hobbit, who is generally more interested in breakfast than gold, is bewildered and seduced by coming upon the dwarves' great ancestral jewel, the Arkenstone. Like the Ring he chanced upon under the Misty Mountains, the stone is quickly tucked away in his pocket, and he does not tell his companions that he has it: he becomes the burglar that his name, Baggins, suggests he has the potential to be. Soon Lakemen, elves and birds all gather round the dragon hoard, wanting a share of the spoils.

What breaks the deadlock as these groups lay siege to the mountain where the dwarves refuse to share any of the treasure, is another theft by Bilbo. He takes the Arkenstone and offers it to the besiegers, so that they can use its glamour over Thorin the dwarf king to force him to make peace. As a result of this burglary, Bilbo is thrown out of the dwarves' company, and is lucky to escape with his life. Yet at many crucial stages on their journey, it had been Bilbo's underhand ways that had ensured their safety: like Odysseus, who hid his men as sheep to evade the Cyclops, Bilbo smuggles the dwarves out of the Elven-King's prison in barrels, which are floated down the river; Bilbo's invisibility allows him to rescue the dwarves from the Mirkwood spiders.

Even Bilbo's riddles, fair as they are in a riddle contest in Anglo-Saxon or Norse conventions, smuggle truth in disguised form: "A box without hinges, key or lid, / Yet golden treasure inside is hid." What the riddle does is to state the reality of an object in paradoxical form, in contradictory ideas. How can a box lack any mode of ingress? How did the treasure get into the box? Our normal categories are questioned and for a moment, a riddle makes the world seem strange or bizarre. In deciphering the answer, we are forced to look at the object in a new way. After the "making strange" comes the illumination; once a riddle is solved it is blindingly obvious - but the egg takes on a new depth of meaning.

The burglar Bilbo is himself a kind of riddle, and of course, the last riddle question Bilbo asks Gollum is "What do I have in my pocket?" Bilbo is thus the key to the riddle whose answer is the emblematic Ring, "the precious" object of desire. Bilbo is the key as he is associated with keys in the course of the plot. He finds the key to the trolls' hoard, which contains important weapons, including the sword, Sting, which Gandalf gives him and which will have so vital a role in this story and in The Lord of the Rings.

Bilbo can take this role precisely because he is not in quite such thrall to gold as the other characters, and where Gollum riddles words associated with his alienated life underground, Bilbo's riddles all point towards relationships and the social in some way - as in "No-legs lay on one-leg, two-legs sat near on three-legs, four legs got some," which conjures up a whole society of a man and a cat sharing a fish-supper. Bilbo is rather like a fairy-tale trickster: a trump card who changes situations and rules and makes new connections.

And like the Christmas burglar and chimney invader, Santa Claus, he is a distributor and gift-giver. For The Hobbit takes us modern capitalists - and Bilbo too with his formal contract - on a journey into more ancient economic models of exchange, in which society operates through the giving and receiving of gifts. To be a recipient of a gift is also to become a gift-giver oneself, so we see the Lake Men restoring the Arkenstone to lie on the breast of the dead Thorin. Bilbo himself is offered huge amounts of treasure but accepts only as much as one pony can carry, and then proceeds to donate jewels as he travels. Once home again in Bag End, he spends the rest in presents too. Tolkien makes all this central to hobbit society, in which one gives as well as receives presents on one's birthday.

The answer to dragon-sickness is not just simple generosity but giving as a mode of exchange, which unites donor and recipient, and which prompts reciprocity. Tolkien unites here gift-exchange practices of traditional societies with the Distributist political vision of his own day, which sought a more equal and just society not by removing private property but by distributing it as widely as possible.

Reading this at Christmas, however, reminds us of the most widely distributed gift of all: the Christ Child, who is given to all of us and to the earth itself. God the burglar - the thief in the night - smuggles himself into the world He made: "veiled in flesh the Godhead see" as Wesley's hymn reminds us and another begins, "When came in flesh the Incarnate Word / The heedless world slept on." Like Bilbo Baggins, there is more to this baby than appears: he too is a riddle, and Christmas poems and carols love to extend the contradictions of his birth into paradox, as in this example from Richard Crashaw:

Welcome all wonders in one sight, Aeternity shut in a span. Summer in winter, day in night, Heaven in earth, and GOD in MAN.

To read this riddle is to open a way to unlock the frozen gaze, fascinated by the dragon hoard but not in such a way as to reject the beauty and value of material objects so much as to pass them on. To see the baby hidden in the manger is to recognise the true Arkenstone, the "heart of the mountain," shining with "its own inner light." The - precious - gift of the Christ Child allows us to be more wedded to the world than ever, but in such a way as to become aware of its vulnerability and contingency.

On his death-bed, the dwarf king, Thorin commends Bilbo's blend of courage and wisdom, adding, "if more of us valued food and cheer and song above hoarded gold, it would be a merrier world." Food and cheer are transitory pleasures, which take their value from the moment and the company. The Hobbit is actually as much about food or lack of it - as well as the fear of being eaten - as it is about the shiny solidity of metal. The dwarves are continually tightening their belts or existing on cram.

Just as Bilbo teaches the dwarves the value of sharing their gold, so they teach him at their first encounter - the unexpected party - the value of sharing food and distributing it as widely as possible. What, one wonders, was one bachelor hobbit going to do with a larder as full as his obviously was with mince-pies and cheese, seed-cakes, pork pies, cold chicken and pickles?

Economics is not a party, and the Incarnation is not a political program but I believe The Hobbit has something profound to offer us at this festive season about the true use of the bounty and beauty of the earth, which is to distribute it in such a way as to enable and make visible as many relations between producers and consumers, and fellow-workers as possible in contrast to the barren golden abstractions and glamour of money-markets. Ruskin wrote, "there is no wealth but life" and the hobbits are so successful a race as enablers and burglars because deep down they know that too.

But even the comfort and the fellowship of the Shire must be given up, "made strange" and riddled, so that one can travel "there and back again." When Bilbo brings us back with him from the Lonely Mountain, ordinary hobbit and human life can itself be received back as a gift, and seen as such, so that its comforts may be shared with others.

Alison Milbank is Associate Professor of Literature and Theology at the University of Nottingham, and Priest Vicar of Southwell Minster. She is the author of Chesterton and Tolkien as Theologians: The Fantasy of the Real and, with Andrew Davidson, For the Parish: A Critique of Fresh Expressions.