As the bestselling author of such stinging political satires as Peace Kills, Holidays in Hell, The Bachelor Home Companion, and Republican Party Reptile (notable for its advice that “anything that makes your mother cry is fun”), PJ O’Rourke, the American humorist, may not have been the obvious choice to write a serious book about Adam Smith, the 18th century Scottish economist.

Yet a wine-fuelled lunch with a British publisher four years ago persuaded O’Rourke that he was just the guy to write a modern study of Smith’s The Wealth of Nations, the seminal 900-page free trader’s bible that for more than two centuries has been a cornerstone of international economic discourse.

“So I’m having lunch – maybe a slightly too vinous lunch – with Toby Mundy [of Grove Atlantic books] and he says to me, do you know about Adam Smith?” O’Rourke recalled last week. “I’d had just enough wine to say, yes, that’s me, I know all about economics.”

The result, to be published in Britain next week, is a startling addition to a new publishing series dubbed “Books that Changed the World”. Scotland’s most esteemed economist submits to the caustic American scrutiny of a satirist who once wrote of the British economy: “Industrialisation came to England but has since left.”

In fact, O’Rourke was only partly joking when he claimed to know “all about economics”. Although he first made his mark on the publishing world as editor-in-chief of National Lampoon, a popular satirical magazine, and later became foreign affairs editor of Rolling Stone magazine, there were always serious undertones to his hard-bitten, mocking literary persona.

In 1998 he published Eat the Rich, a scathing study of the world’s economies, which he summed up at the time: “Why do some places prosper and thrive while others just suck?”

The book was praised by critics, partly because it was bitterly funny, but also because O’Rourke displayed an impressive grasp of economic theory acquired at least in part by boning up on The Wealth of Nations.

It’s difficult to imagine that Smith’s solemn 18th century prose – complete with lengthy digressions into the historical value of arcane commodities – could ever be made funny, but O’Rourke insists that the year and a half he spent reading and rereading everything Smith had ever written was not a cruel punishment.

“Certainly there were moments of profound regret,” he said, “but I did enjoy it. Eighteenth century prose is misrated. It was a period of great clarity in the writing of English. Just compare it to Jacobean fluff and feathers, and to the romantic nonsense that comes afterwards. Sure it’s slow-paced, but hey, there wasn’t much on television at the time.”

O’Rourke insists that much of Smith remains relevant today, from his legendary observations about the division of labour and the value of free trade to the importance he attaches to morality. At one point, rereading The Wealth of Nations, O’Rourke found so many moral issues arising that he stopped to read Smith’s earlier oeuvre, The Theory of Moral Sentiments.

“His importance was not just to economics, it was the connection of morality to economics,” said O’Rourke. “That was his true genius.”

Morality matters a lot to O’Rourke, who describes himself as an “old Whig – very socially conservative, suspicious of all manner of sudden change and yet in favour of reform”. He is one of those immensely genial cultural polymaths – think Clive James or Melvyn Bragg – whose outward wit and charm conceal a rapacious intellect. Vogue magazine voted him one of the “five men you’d most want to sit next to at a dinner party”.

Patrick Jake O’Rourke – everyone calls him PJ – was born in Toledo, Ohio, in 1947 to a local car dealer and his wife. He went to university in the other Miami – the rather less glamor-ous Miami, Ohio – where he began to develop a talent for parody.

After a brief stint as a Hollywood scriptwriter, he went funny full-time, touring the globe in search of the silliness and absurdity that usually lurk beneath every pious politician’s pronouncements. One of his early masterpieces was entitled All the Trouble in the World: The Lighter Side of Famine, Pestilence, Destruction and Death.

O’Rourke is 60 this year, and he freely admits he is slowing down a bit. When I talked to him at his country home in New Hampshire, he was worried about a leaking WC and trying to prevent the family’s new puppy from adding to the flood. Marriage to a woman more than 15 years his junior has provided him with three young children to further disrupt his professional routines. When I asked him about his next literary project, he replied: “I think the rest of my summer will be devoted to the water cistern.”

Yet his writings continue to be driven by a scorching contempt for establishment politicians and their bungling hypocrisies. He once defined politics as “the business of getting power and privilege without possessing merit”.

In his new book he approvingly quotes an American columnist who declares: “The less we understand the economy, the better it does.” He sees politicians as interfering busybodies who seek to regulate human enterprise merely to justify their own existence. “Economics is forever telling us to leave people alone,” he said. “But in modern democracies an especially potent way to acquire power is to increase regulation of all kinds.”

O’Rourke once joked that he had always been a Republican voter, except for a period in the 1960s when he decided to become a Maoist. “At least I was never a Democrat,” he said.

When I asked him if he was still a Republican – despite all the disasters that have befallen George Bush’s White House in Iraq and elsewhere – he replied: “Oh Christ, yes, I was born one.” But there was a note of self-dis-gust in his voice when he referred to Bush as “the guy I voted for twice, for Christ’s sake”. He admits to being “a little ashamed of myself” for not having foreseen the depths of the moral, political and military crisis in which America now finds itself.

“I had seen what Saddam Hussein did to Kuwait,” he said. “I was in favour of the war [in 2003]. But I do remember saying to a friend of mine, ‘Don’t you think this is all being thought out by people who are smarter than we are?’ Apparently it wasn’t.” O’Rourke now says he had assumed that “a kind of postHitler Germany” would emerge in postSaddam Iraq, with the local populace buckling down to an updated version of the second world war Marshall plan. “Sure there would be a bit of scuffling and infighting, but we knew it was the Middle East, after all.”

The only comfort he now takes from his sobering miscalculation is that he was scarcely alone. “It was one thing to be wrong about weapons of mass destruction, but no one seems to have foreseen the ferocity and the extent of the mess that would follow.”

The forthcoming presidential elections in America do not inspire him. He thinks Hillary Clinton will probably win the Democratic nomination, but unlike some of his Republican colleagues, he doesn’t seem to regard this as horrifying. “Oh, I’m no Clin-ton-hater, I got worn out with the last one [former president Bill],” he said. “She’s just one of those glossy, nosy, do-gooder types. She’s too ambitious to be dangerous.”

He suspects that Barack Obama, the black senator for Illinois who is Clinton’s closest rival, is in for a rough ride about some of his so-far unexamined hometown political connections. “He’s a charming and intelligent man, but he was a very ordinary Cook County Democratic machine politician. It was not a very pretty bunch.”

He compares Rudolph Giuliani, the former mayor of New York now gunning for the Republican nomination, to Margaret Thatcher, though not entirely favourably. “What a complete economic and political mess Britain had got into when Thatcher took over. The whole country needed a good spanking. Thatcher was good for Britain not because she was that good herself, but because Britain had got so bad. New York was the same god-damned mess before Giuliani became mayor.”

He sighed heavily. “But not all problems can be solved by being tough. As we have seen in Iraq.”

What would Smith have made of the humbling of the American empire? O’Rourke brightened up again.

Reading Smith’s books he came across plenty of “useful and apt” quotations that echoed across the centuries. He found this one in The Wealth of Nations: “The violence and injustice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit of a remedy.”

On the Wealth of Nations, by PJ O’Rourke, is published by Atlantic Books, £16.99

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