Profile: All the right angles: Laurence Marks on a Conservative intellectual with an answer for everything, even the bow tie: Madsen Pirie

If you see a man coming toward you with the obvious intent of doing you good, run for your life] - Henry Thoreau.

THE Adam Smith Institute, the right-wing think-tank, is holding its monthly drinks party at its offices in Church House, Westminster. Pink champagne is circulating. The institute appears to be staffed by a mutant strain of pre- Elvis young men with short-back- and-sides, a clear gaze and the habit of speaking in numbered paragraphs.

In the middle of the room stands a slim, youthful figure of 53 in a spotted bow tie and a sporty grey suit. This is the famous Madsen Pirie, director of what is in effect the R & D department of the Conservative right. You name it, the good doctor has found a way to privatise it. His well-ordered, symmetrical, Scandinavian features (he is a quarter Danish) distinguish him from the knobbly- faced Englishmen around him.

Next to him is one of his major benefactors, Sir Clive Sinclair, the electronics whizz. They are wearing the gleaming, determined smiles of the representatives of the Student Christian Movement who used to knock on your door to invite you to coffee evenings when you were an undergraduate. You notice the two men's affinity at once. They both see society as a faulty machine that could be made to work humanely if only people would read the help manual written by chaps like themselves.

Last week the institute published 20-20 Vision, a Utopian conspectus of life in 2020. Basic rate income tax at 10 per cent; universal private nursery education; privatised motorways and trains; set- aside land replanted with trees and stocked with wolves and bears; unemployment and invalidity benefit replaced by personal insurance.

Dr Pirie's spiritual avatar is Friedrich Hayek, the Austrian- born critic of Keynesianism. 'The conventional question used to be: do you want a planned society or chaos?' says Pirie. 'Hayek would rephrase that to: do you want society planned from the centre by a few minds or at the periphery by individuals evolving a social order out of their relations with one another? The key is spontaneity, which always produces something better than central planning.'

Pirie has devoted the past 17 years to trying to prove not the truth of this proposition - he isn't really an empiricist or a sceptic - but the practicality of constructing a society in which its truth or falsehood may be demonstrated. During the Thatcher years, as a gifted publicist, he played an influential part in her astonishingly swift subversion of assumptions about social and economic policy.

He is a spirited man, warm, direct and courteous, fascinated by how things work. He has invented the 'Pirie knot' as a cure for bow ties that sit at an angle of 15 degrees, so that you spend the evening furtively straightening them. 'People struggle all their lives with the irrationality of the bow tie,' he says. 'I've worked out a better way of doing it. With the conventional knot, you don't know until you've finished tying it how it's going to come out. I tie a layered knot, constructed systematically so that you get it right every time.' Beau Brummel lives.

He was secretary of Mensa, the club for high IQs, for 10 years and spent seven learning tae kwon do, a ferocious Korean form of karate. He is unmarried, with homes near Cambridge and in the Florida Keys. His libertarian principles are genuine and unqualified. Many Conservatives combine their commitment to free-market economics with authoritarian views on censorship, sexual conduct, penal policy and immigration. Pirie has kept the institute out of those areas.

This attractive trait is traceable to his boyhood. His father, like John Major's, was a resourceful but not very successful self-employed businessman. The similar background may partly explain his admiration for Major, with whom he is on friendly, though apparently not close, terms.

His mother died when he was two, his father remarried, and Pirie and his sister were left to the care of their grandmother and aunts. Distanced from the close affection of young parents, he was left to his own devices. He became a bookish and mutinous schoolboy with a lifelong distaste for control freaks.

MADSEN PIRIE was educated at Humberstone Foundation School, a small-town grammar school in Lincolnshire, and Edinburgh University, where he got a 2:1 in history. His PhD thesis at St Andrews contested Karl Popper's theory of falsification. Popper argued that propositions can't be proved to be true, only shown to be false. Pirie argued that they couldn't be proved true or false. In 1974 he went to Washington to work for the Republican Study Committee, a think-tank on Capitol Hill set up by 80 or so Congressmen. He was converted to American methods of promoting political ideas.

He then taught philosophy for four years at a liberal arts college at Hillsdale, Michigan. He loved teaching and loved America, following the Dallas Cowboys, the Miami Dolphins and the Forty- Niners. 'What impressed me was the intelligence and rationality of American football,' he says. 'It's like chess.'

He came home to found the Adam Smith Institute in 1977. Think-tanks are a post-Second World War phenomenon. The previous great revolution in political philosophy, in the decade or so before Clement Attlee's Labour government took office in 1945, had been worked out largely within party structures.

Pirie was inspired by the reclame of two autonomous right- wing think-tanks, the Institute of Economic Affairs, founded by Arthur Seldon in the 1950s, and the Centre for Policy Studies, founded by Keith Joseph and Margaret Thatcher in 1974. He and Eamonn Butler, a friend from St Andrews, raised some money from business and went to work on a shoestring.

The world of think-tanks is opaque. Most are known only by their initials and are permutations of words like centre, institute, policy, research and studies. Who outside it can remember the precise shades of difference between the IPPR, the CPS, the IEA and so forth? It disdains acronyms. If there were a FERG (Flat-Earthers Research Group) or an IPSO (Institute for the Promotion of Snake Oil) it would be easier. Also, the aggrandising resonance of some of the names is deceiving. You go round and it turns out to be Shirley Williams sitting in a sort of book- lined cupboard.

Pirie and Butler had the sense to choose a distinctive name. It was conceived on the bicentenary of the publication of The Wealth of Nations by Adam Smith, the 18th-century economist who demonstrated that the pursuit of enlightened self- interest by individuals and enterprises can benefit society as a whole. But Smith would not have shared the New Right's rejection of altruism as an engine of human behaviour and would probably have been shocked at Pirie's appropriation of his name.

The institute publishes about 20 reports a year, written by panels of consulting academics, journalists and retired civil servants. A staff of six co-ordinates them. Another six run the flourishing trade with former Communist countries seeking free-market advice.

Half the pounds 300,000 annual budget comes from sales and conferences. (As Gerald Frost, director of the CPS, says: 'We're all really second-hand dealers in ideas.') The other half comes from business sponsorship. Pirie says that no company contributes more than 10 per cent.

The principle of privatising public assets had been around for some time. The IEA and the CPS had promoted it. It had been studied by Victor Rothschild's Downing Street brainstormers during Ted Heath's Conservative government of 1970-74. The Taiwan government had actually done it. Pirie's success was to market the idea with such verve that the Adam Smith Institute has been demonised by liberals.

The institute is chronically dissatisfied with the inherited order of the universe. The welfare state? Encourages dependence. Public housing? Breeds crime. Statutory regulation? Its rulings are arbitrary. As Sydney Smith said of the Edinburgh Review, if asked to pass judgement on the solar system it would certainly damn it: 'Bad light . . . planets too distant . . . pestered with comets . . . feeble contrivance . . . could make a better with great ease.'

What's wrong is not the diagnosis but the prescription. First, the quest for a grand unification theory that attributes most of the ills of society to a single cause, public ownership, affronts common sense. Anyone who believes that privatisation is a cure for bureaucratic muddle clearly hasn't transacted business recently with Barclays Bank.

Second, the power of the state grew under Thatcherism rather than diminished, crippling democracy. What help is the market to people whose social conditions are decreed by government agencies? And even if the market were efficient, people recognise that the achievement of economic goals is not the only good. The Visigoths of Conservatism are wiping out an entire culture, founded on local and regional democracy, that is 'valued' in a different way by millions of people.

It would be sad if this likeable man were to go down in history as a false prophet. As Geoff Mulgan, director of the independent think- tank Demos, says: 'The intellectual energy of the right has dissolved in the past five years. Where do they go from here?'

(Photograph omitted)