The first time I met Damien Hirst, nearly nine years ago, I stepped into his Bloomsbury office to be confronted by a scene that resembled one of those classical friezes that prefigured the collapse of the Roman Empire. The artist was reclining on a voluminous sofa and proceeded, by way of introduction to his bohemian world, to peel the T-shirt off a complicit (male) friend. Acolytes laughed sleazily as Hirst draped himself over his bare-chested playmate. I waited awkwardly for the bacchanalia to die down. When we eventually started our interview, he was in turns rambling, defensive and downright hostile.

I remind him of the encounter when I meet him again at London’s White Cube gallery in Mayfair. “I was doing a lot of cocaine then,” he responds dismissively. And then, in an engaging and businesslike manner, as if to emphasise the difference between then and now, he takes me on a quick virtual tour of his latest show, Beyond Belief.

The exhibition is still in the process of being set up but that doesn’t stop Hirst, who describes the prospective mise-en-scène with fast, staccato phrases. “This is the shark, cut in half. You walk down the middle of it. Here are the paintings of my son being born. By Caesarean.” And then, in another room: “These are the biopsies. They are all diseased. Cancer, mostly.” Hirst’s personal life may have taken a radical turn towards the wholesome but his work still delves in what he playfully calls “the big things”: life, death, and the numerous stages of troubled humanity in between.

One room is reserved for an artwork which has already become notorious in the weeks leading up to the show. “For the Love of God” is a life-size cast of a human skull in platinum that is covered entirely by 8,601 pavé-set diamonds. “Without precedent in the history of art,” gushes the gallery’s promotional material. But the popular imagination is captured more by the work’s price tag than its art-historical significance: a cool £50m.

Hirst describes the piece as the culmination of a “crazy idea.” He was inspired, he says, by a decorated Aztec skull he had seen in his childhood. And then he wanted to find a way to depict “the ultimate victory over death, the most you could get from decoration, because our society loves money and wealth.” The skull, manufactured by the New Bond Street jewellers Bentley & Skinner, was his answer.

I say it sounds a bit blingy. “The idea is very blingy but it turns out to be something much more. The way it looks is amazing. You almost believe that it is a victory over death, which bling isn’t, really. It’s not something you could hang round your neck and go to a club with.”

Not least because of its value, presumably. I ask Hirst how much it cost just to make. “Millions. More than £10m. Probably more than £15m. We are still spending money on it. Insurance, transportation. Just looking after it is very expensive.”

If a visitor to London’s vibrant cultural scene were seeking a metaphor to describe the crazed buoyancy of the contemporary art market, here it is. The past couple of weeks have seen further records tumble for contemporary artists at auction, including Hirst’s own, when “Lullaby Winter”, one of his medicine cabinet altars, sold for $7.4m at Christie’s New York. But that £50m price tag puts him in a different league, up there with the Picassos and the Pollocks. Hirst, who has already amassed a personal fortune of £130m, according to this year’s Sunday Times Rich List, is hotter, and richer, than ever.

I ask if the stratospheric sums in today’s art market ever give him pause for thought but he remains resolutely unfazed. “I don’t see what else you can spend your money on,” he says of the super-rich. “If you want to own things, art is a pretty good bet. Buy art, build a museum, put your name on it, let people in for free. That’s as close as you can get to immortality.

“I love art. It is uplifting. If the choice is between buying another building or a Pollock, I’d go for the Pollock every time.” Lest this sound too romantic, the Yorkshire-born Hirst immediately follows up with a bracing piece of pragmatism: “At least if people spend a lot of money on art, they will look after it. I was worried about that in my youth. What would happen to my work? Would people just leave it behind when they moved house?” If any of them did, they will be kicking themselves today.

Beyond Belief consists entirely of new work, although there are some familiar Hirstian themes and tropes. Seven new formaldehyde sculptures, part of the ongoing “Natural History” series, include a tiger shark divided longitudinally, with each half of its body suspended in a separate tank. There are the plays on Christian iconography: in “Saint Sebastian – Exquisite Pain” another tank containing a single black calf shows the animal pierced by dozens of arrows and tied to a steel post.

In “The Adoration”, Hirst reconstructs the nativity scene in his own way: three sheep kneel in supplication to a sterling-silver baby, housed in an incubation unit. Hirst describes it as a “retelling” of the nativity story “but with three dead sheep praying to a silver foetus”. Considering this moment celebrates the birth of Christ, there is not much sense of life there, I say. “There is the life of the art,” he replies quick as a flash.

Is he being satirical? “Nobody believes that people actually followed a star and there were these three wise men. It is a way of telling the story in our more cynical age, where the object being worshipped is like a piece of jewellery and maybe it is being worshipped because it is so valuable.” The work has all the key parts of the story but they are jumbled about, he says. “I don’t work it all out, I just play with it until it feels right. But there is humour there, yeah.”

Disillusionment with religion is a recurring theme in these works. “Religion is failing in lots of ways,” he says. “But it’s not enough to knock things and say, ‘Screw the church.’ You’ve got to offer an alternative.” And it is in some of the other new work in the show that Hirst hints at part of the answer: science.

His “Fact Paintings” are a series of works that record the birth of Hirst’s youngest son Cyrus by caesarean section in August 2005. They are, as one might expect, frank depictions of a medical process that Hirst refuses to sentimentalise. He shows me some slides of the work. “That’s the epidural kit. And that’s the baby on the breast.” There is no discernible change in his tone of voice as he moves from one to the other.

I ask how it felt, taking dispassionate photographs of this profoundly moving moment (from which the paintings would be made). “It wasn’t like that. It’s a very impersonal environment. It’s a hospital – change the baby, change the wife and it is the same for everybody. It’s not very real, in a way. And then it’s miraculous, freaky, weird. It’s like an alien coming out of the belly.”

If the “Fact Paintings” are as close as Hirst’s work gets to life-affirming, the “Biopsy Paintings”, based on biopsy images from the Science Photo Library of different forms of cancer and other terminal illnesses, tell a different story entirely. The images themselves are abstract and often beautiful but Hirst uses broken glass and scalpel blades to disturb their calm. “You think, ‘That’s nice,’ and then you see it’s cancer and you think it’s not so nice,” says Hirst jauntily. “It’s like a good-news, bad-news joke.”

And then comes that pragmatism again. “I just needed some big paintings,” he says disarmingly. “Otherwise, I knew I would get all that stuff in the press: ‘Oh no, not that old stuff again.’” I say I am surprised he would pay such attention to the press. “I am always trying to escape from myself anyway. But you can’t constantly reinvent yourself. As you get older, you accept who you are a lot more.”

Hirst celebrates his 42nd birthday just a few days after the show’s opening next month and I ask if entering middle age has added resonance to the themes – death and mortality – that have always preoccupied him.

“They get more complicated, more elusive. You get more fear. Death always seems beyond the realms of possibility. It doesn’t bear thinking about.” But is he not doing his best to make other people think about it? “You have to. You have to come at it from an angle. And a by-product of death is that life is precious.”

Hirst was raised in Leeds and encouraged in his drawing by his mother Mary in the course of a rowdy adolescence. His own life was transformed when he rose to fame in the 1990s, after he had curated the infamous Freeze student show, which helped launch the Young British Artist movement after it was visited by an enraptured Charles Saatchi. The YBA movement became enmeshed  

in the public imagination with Britpop and a whole new cultural climate that a certain newly elected, young prime minister was keen to co-opt as part of his vision of a new Britain.

I ask Hirst if he had ever felt part of that scene. “The big thing for me was punk. I was too young for it, but seeing the way they just said ‘Fuck off’ to everyone, that was what I thought. That was under Thatcher. She did things, even though you may not have liked them. [Tony] Blair didn’t have any impact on me at all.”

Was he invited to the famous Cool Britannia party? “No. Too tricky.”

That might have been thought of Noel Gallagher too but he was summoned.

“The music business is very different from the art world. The art world is still artist-led. The record companies don’t want artists who think. They want bands who will be entertaining and make lots of money. There are more pressures on them.”

But that applied to artists too, surely? Wasn’t the behaviour of Saatchi himself a pressure?

“When I was at college, people were saying that Saatchi was affecting the market by his buying and I was frightened of that. But I don’t think it’s what he meant to do. It’s just that if you go in and say, ‘I want it all,’ and buy it all and then sell it all, it causes a lot of upheaval.” Hirst rode the subsequent waves with consummate skill, helped by a dictum given to him by his business manager, Frank Dunphy, who has been credited with turning round the artist’s finances: “Always make sure you are chasing your art with the money, not chasing the money with your art.”

It served him well. Hirst’s lifestyle today is enviable, spending three months a year in Mexico with his girlfriend Maia and their three sons and living in Devon for the rest of an invariably active year. He has been clean from drink and drugs for five years: “It’s for kids. You start to smell and talk shite. I had a good time and I made some good art. But less of it.”

Today there is more art and a wisely spread portfolio of interests. Among his other properties is Toddington Manor, a stately home in the Cotswolds, which he plans to turn into a museum for his personal collection. Hirst has always bought but has recently begun to buy big: Warhol, Bacon. I say I imagine he would covet a Bacon Pope painting. “Too expensive. It’s out of my league. But you never know.”

Earlier this year, he had his first solo show in Los Angeles, at the Gagosian gallery, where his butterfly paintings proved popular with some glamorous buyers. I ask if he enjoyed hanging out with the beautiful people and he bridles slightly. “I got out before the Oscars. The press got a lot of things wrong. They said Courteney Cox bought a painting when it was Courtney Love who bought a print.”

He also met David Hockney, he says with palpable pride. “He is from Yorkshire and we have the same initials. He said if anyone asks about the deterioration of the butterfly paintings [the same criticism has been made of some of Hirst’s formaldehyde sculptures], just say that there have been artists’ careers that have faded faster. Heh, heh. That’s a good line.”

I ask Hirst finally if he ever feels tempted to comment on the world in a more direct way in his art, which remains curiously elusive to pin down. “There’s a great quote by Sylvia Plath, where she says that she can’t feel anything looking at the explosion of an atom bomb but she is more interested in the thoughts of a tired night surgeon or a baby forming itself, finger by finger, in the dark. That’s what art is about. If you start painting atom bombs, it loses its power.”

It’s a remarkably tender observation. We finish, and he leaves the room, pausing only to look at a small and pointless piece of wood on the wall.

“Do you think that’s a work of art?” Don’t ask me, I say. He knocks it three times, rap, rap, rap. “No. It’s a piece of wood.”

‘Damien Hirst, Beyond Belief’, June 3-July 7, White Cube, Hoxton Square and Mason’s Yard, London.

Tel: +44 (0)20-7930 5373; www.whitecube.com

The most expensive living artists

If Damien Hirst sells “For the Love of God” for £50m it will make him easily the world’s most expensive living artist, writes James Fontanella. But right now he isn’t even in the top five. Figures are not easy to come by – few collectors disclose the prices paid for pieces sold privately – but, based on auction sales at Sotheby’s and Christie’s and on market data gathered by ArtNews magazine, it’s possible to make a good guess at the current top sellers. Our list of art high-flyers is based on the top price paid for one of their works in the past 10 years.

Jasper Johns $80m

Last year Kenneth Griffin, a Chicago hedge-fund billionaire, acquired Jasper Johns’ “False Start” from David Geffen, the movie mogul and founder of DreamWorks, for $80m, putting the artist way ahead of the pack. But Johns has long been a big hitter. In 2002 Geffen paid $40m for his “Gray Numbers”, according to ArtNews. And, according to New York magazine, in 2000 Leonard Lauder, the cosmetics entrepreneur, paid $26m for Johns’ 1961 painting “0 Through 9”. Johns’ current work is still popular, but collectors particularly value the pieces he produced in his youth: Christie’s in New York sold “Figure 4” (1959) for $17.4m earlier this month.

Cy Twombly $20m

A US army cryptologist in the early 1950s and currently living in Italy and Virginia, Twombly saw his “Lepanto”, a 12-panel painting, sold for more than $20m to a private buyer in 2002. In the same year François Pinault, the chief executive of PPR, the French group that owns Gucci, paid $10m for his “Coronation of Sesostris” and, in 2005, his “Untitled (New York City)” was sold for $8.7m at Sotheby’s, New York.

Robert Rauschenberg $12m

The first American winner of the Grand Prize at the Venice Biennale, in 1964, Rauschenberg is best known for his “combine paintings”. In 1999, New York’s Museum of Modern Art privately bought “Factum II” for $12m, according to ArtNews. This year, his 1959 painting “Photograph” was sold at auction to Abigail Asher, a private dealer, for $10.7m.

Peter Doig $11.3m

The British artist set a new record for a painting by a living European artist last month when his “White Canoe” fetched $11.3m at Sotheby’s in London. Doig, a Scot who lives in Trinidad and Tobago, is a fairly new entry in the league of expensive artists. His previous record was a relatively unremarkable $1.2m for “Iron Hill”, sold by Sotheby’s in June last year.

Lucian Freud $8.2m

A giant of European painting, in 2005 Freud saw his “Red-haired Man on a Chair” sold for $8.2m at Christie’s in London. However, that record will be beaten if his “Bruce Bernard, 1992”, which goes on sale at the same house next month, reaches its estimate of $9m to $11m.

Damien Hirst’s $7.4m for “Lullaby Winter” and Gerhard Richter’s $6.2m for “Abstraktes Bild” – both sold at Christie’s in New York this month – make them strong contenders for the top five slots in our chart, as does the more than $5m that Jeff Koons’ “Michael Jackson and ‘Bubbles” was sold for in 2001. But it is after an artist’s death that the battle becomes really tough. Last year Jackson Pollock’s “No. 5” and Willem de Kooning’s “Woman III” sold for $140m and $137.5m respectively.