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There’s a hell of a lot of money in art - but the artists don’t get it,” grumbles Damien Hirst, giving himself a thoroughly good scratch through the faded brown T-shirt he has decided to wear to Sotheby’s today. “What I find is unfair is the Van Gogh thing. The artist doesn’t make any money, but everyone else does.” That, at least, was how it used to be before Hirst himself entered the lists. Now the ratios appear to be changing. If things go according to plan - and most of the ridiculous stunts Hirst comes up with work out surprisingly well - then, a fortnight from now, the old way of making pots of money from art will look as out of date as last year’s winner of the Turner Prize.

To understand what Hirst is doing by putting 223 new works up for auction at Sotheby’s, I suggest you go along to one of the presale viewings - daily until September 15, admission free - and search out his latest shark piece, The Kingdom. It’s a huge black case featuring an 8ft tiger shark suspended, as always, in formaldehyde. The hideously pointy mouth is wide open, as if it is going to eat you, and its evil little piggy eyes search you out with that terrifying one-directional stare sharks have. Tiger sharks, remember, can bite through the shell of a marine turtle. If they are feeling particularly peckish, they even eat each other.

Once you have found the shark, imagine that it represents Sotheby’s. No, go further than that. Imagine that it represents the entire art world and the manner in which it pursues its business. See how predatory it is, how cunning, how fixated on its prey, how implacable and ruthless. Now stand in front of this evil killing machine, look it straight in its piggy little eyes and start flicking V-signs at it. Go on. Dance around in front of it, wiggle your behind at it, stick your tongue out between your lips and blow raspberries at it. That, more or less, is what Damien Hirst is doing to the art world by putting 223 new works up for sale at Sotheby’s.

The art world, you see, doesn’t do things this way. The way it is supposed to happen is that new art is sold by dealers in galleries, and only when it has been around the houses a few times does it turn up again in the auction rooms, to be resold for a profit. That is how it has always been. Sotheby’s has been around since March 11, 1744, when a certain Samuel Baker auctioned a selection of rare books “in all branches of Polite Literature” at his office in London, and not once in the intervening two and a half centuries has the company sold new work by a living artist direct to the public.

“Yeah, but if you don’t like the rules, change the rules,” chirps a noticeably chipper Hirst as he leads me through the extraordinary labyrinth of sharks, butterflies, bulls, skulls, scalpels, gold bars and diamonds he has somehow managed to cram into the formerly elegant Sotheby’s galleries on New Bond Street. The plush spaces were created for the display of 42-piece Sèvres tea services, not for full-size zebras in glass cases, so the art sometimes seems too big for its surroundings. But the resulting claustrophobia merely adds to the splendid London buzz of it all. Anyone seen the recession? Not in here, mate! Squeezing your way through these remarkable sights is a bouncy and exciting journey. Hirst has forced Sotheby’s to get in touch with its inner branch of Accessorize.

“I was indoctrinated by the gallery system - that you don’t do auctions,” he admits with another bout of happy scratching as we stand in front of a very convincing unicorn created by appending a narwhal horn to the forehead of a snow-white pony. “But who says you have to do it this way and not some other way?”

It’s a good question. Indeed, it’s an important question. As far as I know, there is no actual rule written down anywhere stating that auction houses are not allowed to sell new work. Like so much of the art world’s behaviour, the traditional division of the spoils between the auctioneers and the dealers has been governed instead by nods and winks, gentlemanly handshakes and mysterious exchanges of glances.

The way it used to work, Hirst expands, happily spilling the beans on the furtive aspects of the art world’s behaviour with a Dennis the Menace peskiness that I adore - and which only really powerful people can risk - is that an “unofficial arrangement” was in place ensuring that the auction houses only sold work that was five years old or more. Anything newer than five years old was the preserve of the dealers. Recently, however, as the big auction houses began deriving more and more of their income from contemporary art, the dealers found themselves being squeezed. First, the dealers’ window was tightened from five to two years. Now, with this sale, it has been banished altogether.

Hirst is far too canny a diplomat to admit publicly what all this could mean for the art world, so let me admit it for him. If this auction works, the dealers are stuffed. There is absolutely nothing to stop any artist anywhere selling their work direct through the auction houses. Bang goes the dealer’s 50%.

It was Sotheby’s who approached him about the sale, not the other way round. In fact, it is always on the phone asking for unsold pieces to be put up for auction. His answer has always been yes - if it takes new work. But that has been the sticking point. Because of the unwritten arrangement with the dealers, Sotheby’s has never been prepared to sell new pieces by him. Until now.

Everything in this sale has been made specially in the past two years. That in itself is an astonishing achievement. These days, Hirst runs no fewer than six studios, divided between London, Devon and Gloucestershire, and each of them has been working like the clappers to produce this much art in these sorts of sizes in this kind of timescale. Not only is the huge selection of offerings the largest exhibition Sotheby’s has ever put on, it forms the largest Damien Hirst show there has ever been.

Although everything is new, it all forms the familiar Hirst clusters: spot paintings, spin paintings, animals in glass tanks, butterfly pictures, medicine cabinets, pictures made of dead flies. His ambition was to produce “great examples” of everything he does. The biggest and most expensive piece in the show is a life-sized bull, suspended in formaldehyde, which has been given solid-gold hooves and horns. The gold plating of its case is apparently the largest bit of gold plating ever attempted on a vitrine. Hirst’s fierce new taste for bling is a distinctive feature of the show. In the old days, the biggest influence on his work appeared to be the natural-history displays he saw as a child. Nowadays, it is probably the taps in the Sultan of Brunei’s bathroom. As a fellow lover of bling, though, I’m not complaining.

The actual beasts in the boxes came mostly from zoos, which have begun phoning him up to offer him things. That’s how he got his zebra. The other day, he bought a rhino, but had to send it back because it arrived with its horn sawn off. Earlier in the summer, a basking shark was washed up on the beach in Cornwall, and he bought that as well.

If the full-sized, glassed-in animals are the show’s most spectacular and expensive works - the guestimate on The Golden Calf is £8m-£12m - the prettiest are surely the butterfly pieces. For several years now, Hirst has been Britain’s biggest importer of butterflies. People always say that his butterfly pictures look like stained-glass windows, so the two biggest ones in this show are actually modelled on the rose windows of Lincoln and Durham cathedrals. Both are expected to fetch close to £1m.

“The first time you sell something is when it should cost the most,” he says. “I’ve definitely had the goal to make the primary market more expensive.” He compares a Prada outlet and an Oxfam shop. Why, in the world of shoes, do you pay more for a new pair from Prada, while in the world of art, the big money kicks in only when the shoes get to Oxfam?

His Sotheby’s hoard has been divided into three separate sales, beginning with an evening sale on Monday, September 15, and continuing the next day with a morning and afternoon sale. The original idea, I’m later told by Hirst’s crafty Irish manager, Frank Dunphy, was for a few new pieces to be included in an upcoming auction - “But you know Damien. He likes to think big.”

Dunphy is another fascinating character. Nobody else in the art world is remotely like him, either. While Hirst is led off for a BBC interview by an exquisite cluster of besuited Sotheby’s types, to whom he offers a startling contrast, his chauffeur-driven Mercedes is brought round to the front and I’m whisked off to the nearby headquarters of his empire, a couple of beautiful Georgian terrace houses banged together in Mayfair, from which the many branches of Hirst Incorporated are run.

Dunphy used to be Coco the Clown’s accountant. No kidding. Circus acts were his speciality. At one time, he represented all the world’s jugglers. Now he brings this unusual experience to bear on the enlargement of Hirst’s earnings. They met over a game of pool at the Groucho Club when Hirst needed someone to sort out his tax affairs. Most modern artists would never in a million years take on a 70-year-old Irish blarney merchant with a background in circuses to be their manager. But Hirst is not most people.

Their relationship has turned out shockingly well. Dunphy is the one who negotiates all the deals. He acquired Hirst’s houses for him (Hirst owns between 30 and 40 properties; neither of them is exactly sure how many there are) and he buys art for Hirst at auction. It was Dunphy who recently picked up that tiny Bacon self-portrait in New York for $33m. Hirst now owns six Bacons. Or is it seven? Dunphy likes auctions because they are so democratic. “You bring your money along, you put your hand up and you’ve got it.” He was the one who decided, a few years ago, to auction the contents of Hirst’s restaurant, the Pharmacy, and watched with astonishment as people started bidding hundreds of pounds for a used restaurant glass. That is why he likes auctions.

He likes big round sums, too. When I ask him how much Hirst is worth today, he casually tosses back the figure of a billion. Dollars, that is. What is certain is that no artist has previously earned as much as Hirst: “This guy is the biggest dollar-earner in the history of art.” Dunphy is old enough to remember Harold Wilson giving the Beatles a gong for their dollar earnings. But he cannot imagine anyone giving Hirst anything for the same achievement. It’s a good point. When pop stars and sportsmen do exceptionally well in their professions, everyone cheers their international success. When an artist does the same thing, a dark cloud of suspicion descends on them. The assumption that only poor artists are good artists seems, weirdly, to be ingrained within us.

One more question before I go, Frank. What exactly is the situation with the diamond skull? The one that was supposedly sold last year for £50m? The word is that Hirst himself was part of the investment group that bought it. Not quite, Dunphy insists. A well-known investment group bought a third of it, but Hirst still owns the other two-thirds. Were you asking too much for it when you set the price at £50m? Not at all. They were asking too little. The price for the skull is now set at £150m. Hmm. Earlier in the day I had asked Hirst about the skull, and he had told me that he owned a third and that the investment group owned two-thirds. Artists really are rubbish at maths, aren’t they?

Back at the auction, Hirst is now showing his pal David Bailey around the show, and Bailey is telling everyone within earshot - ie, north of the Thames - that this is the best exhibition he has ever seen. You’d better give it a good review, he growls at me, or else he will make sure I have my legs broken and end up buried in concrete in the East End. No need for that, David. I love the show. What’s more, I’m almost as confident as Dunphy that it will do very well, and that when everyone wakes up on the morning after, they will be waking up to an art world in which the rules have been changed.

I’ll go further than that. There’s even a chance Hirst’s ridiculous auction will lighten the mood of the entire nation. Who else but an artist could ignore all this nonsense about recessions and cutbacks so blithely and stride so crazily in the opposite direction? Now, where’s that tiger shark? I want to flick V-signs at it.

Beautiful Inside My Head Forever, new work by Damien Hirst, is on show daily at Sotheby’s, New Bond St, W1, until September 15; check times at www.sothebys.co.uk

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