Dustin Hoffman once told me: “Comedy is important” (forgive the name-dropping, but it’s what we do in show business). Admittedly it was no more than a fleeting 30-second conversation, but I’ve never forgotten it, and I’m sure he hasn’t either. If you visit the Edinburgh Fringe Festival this August, you’ll see just how right he was – comedy attracts by far the most attention from the public, the critics and the media. And stakes are high. Young comedians have the chance to follow the paths of Paul Merton, Jack Dee and Harry Hill from obscurity to the big time. If the show bombs you can lose thousands of pounds.

The laughter industry is booming and everyone seems to want a piece of the action. Even someone with a proper job, like the novelist AL Kennedy, can be seen strutting her stand-up routines at the Fest. (The word is she’s very good indeed. Maybe I should retaliate with a best-selling novel.)

I did my first show in Edinburgh in 1983, and this year will be my 21st. (I’m still waiting to be discovered.) Though I’m from Glasgow I actually began my comedy career in London at the opening night in May 1979 of the Comedy Store, where Alexei Sayle, Rik Mayall, Ade Edmundson, Nigel Planer, Peter Richardson, Keith Allen and Ben Elton shoved aside the outdated bigotry of the Bernard Mannings and Jim Davidsons and alternative comedy was born.

In the early days, the cornerstone of my act was the twin aspects of being Scottish and Jewish (“two racial stereotypes for the price of one”). I would also throw in that I was an accountant, which always seemed to raise a laugh. I don’t know why. I wasn’t really like the ranty political types of the alternative scene, though. On most subjects I tend to see both sides of the argument. I’m more a radical don’t know. I concede that this might be construed as being wishy-washy, but in fact it’s really brave. As the former Israeli Foreign Minister Abba Eban said: middle of the road politics is dangerous – that’s where most accidents happen.

Later I appeared at the Comic Strip – which opened as a kind of rival to the Comedy Store, above Raymond’s Revue Bar in Soho – and provided a more gentle kind of satire somewhere between Alexei’s anarchic Marxism and the manic lunacy of Rik and Ade. I still remember the day a few months after it opened when two young women showed up to audition: Dawn French and Jennifer Saunders. Showing my psychic gift for prescience I knew then they’d never make it… .

Even if you are an old hand like me, coming up with new material is always daunting. I’m working up a new show called “Happiness: the search continues”. I’m following the advice of legendary American-Jewish comedian George Burns who said it was crucial to try out new material at low-profile venues, where it doesn’t matter too much if you fail. In fact, he said it was essential to “die”. Considering he lived until he was 100 this proves that dying frequently is perhaps the key to a long life as a comedian. That’s why you’ll find even top comedians honing their material in tiny rooms above pubs before they go up to the big venues in Edinburgh.

I’m doing mine in various pubs in North London. I’m trying to find out what really works, but I don’t just want to amuse the audience. As one of my favourite stand-ups, Norman Lovett (of Red Dwarf fame), said, “Titters are no good to a comedian.” At these previews, you might discover that what you thought was a hilarious observation goes down like a lead balloon, or, if you’re lucky, you might spot an improvised remark which can be used again. I make a point of recording all these try-outs so I can use what works.

This year I have some insurance: a brilliant, stylish Irish comedian – Ian Macpherson – is my special guest, so by the time I come on I’ll know that the audience will be in a receptive mood.

When you get to Edinburgh the most important factor is the reviews. An early favourable mention, particularly in The Scotsman, means that your show has a chance of standing out from the hundreds of others. If you are coming to Edinburgh do drop by, though I should perhaps warn you that if you leave having learned the secret of happiness, I for one will be very much surprised.

“Happiness: the search continues” is at the Edinburgh Fringe, Stand Three (Venue 12), 3pm, 2nd–24th August (not 11th) 2008