In the Italian city of Lucca recently, Santiago Sierra created an artwork. He paid some east European female prostitutes to assume various sexual positions - missionary, doggy, and quite possibly several others. Then he wrapped their genitals in polyurethane. Later he exhibited the polyurethane in a gallery that was on the site of a former church.  Were the results beautiful casts? "Oh no, they were quite formless," says Sierra, as he chain smokes in a south London cafe. "They just looked like semen, except - obviously - there was much more in terms of volume."  But then the Mexico-based artist is no stranger to semen. Once, he hired some labourers to masturbate for him, and paid them a minimum wage. The resulting work, he says, was to highlight the functioning of the labour market by showing what people will do for even a little money. What did he do with the semen? "We just cleaned it up." Didn't you miss a trick? Couldn't you have bottled it and sold a few cases to Charles Saatchi? "I don't think that would have worked artistically," he says.  The 36-year-old artist, who was born in Madrid, has already wound up the movers and shakers of Britart. Last month, a steady stream of them turned up to the opening of the £500,000 extension to the Lisson Gallery in London, expecting canapes and cocktails. Imagine their frustration at being confronted by a sheet of corrugated iron across the entrance. "It was as though they were saying: 'Just get me inside and give me a drink. That's what I've come for.'" So the invitees weren't so much frustrated at being deprived of an aesthetic experience, but angry because they couldn't get inside for champagne and nibbles? "Obviously," says Sierra. "I mean, there were 10 other openings in town that night. And the aesthetic experience was right in front of them. The corrugated sheet was beautifully made. They just weren't ready to look at it."  He is an impish fellow, is Sierra, with sad brown eyes and a matching doleful philosophy about capitalism rampant. One art collector was so annoyed at his artworld prank that he told a newspaper he would never buy anything from the Lisson ever again. "I feel very ashamed about my part in that," says Sierra.  A couple of weeks later, someone threw some paint over Space Closed By Corrugated Metal. According to Justina at the Lisson: "Santiago decided not to clean it off because it was an artist performing an art gesture on another artist's work. He liked that."  But what was Space Closed By Corrugated Metal all about? "It was part of a broader work which is a commentary on frustration at not being able to get in somewhere for economic or political reasons," says Sierra. It was prompted by events in Argentina, where, following the collapse of the peso, banks pulled corrugated sheets across their buildings to stop people from withdrawing their savings. Argentinians protested against this, and took to the streets in March this year, banging pots and pans against the sheets. Sierra taped these sounds and sent 7,000 CD copies of the recording out to galleries in London, New York, Vienna, Frankfurt and Geneva. "To participate in the project," said the CD sleeve, "put your speakers in your window, turn your stereo up to full blast and play the whole CD at the following local times." A worker at the South London Gallery said: "We did this, and the sound of all these pans was blaring out across the Peckham Road, but nobody complained. The sounds of Buenos Aires demonstrating against global capitalist policies didn't seem to upset anyone."  But Space Closed By Corrugated Metal did. "I was pleased about that because I wanted to make people angry," says Sierra. But some people thought it was just boring, I say. "I think boredom is very close to anger." But you weren't just depriving them of canapes - you were also depriving them of spectacle, I suggest. If you'd filled the gallery with masturbating men, there probably wouldn't have been as many complaints. "I know what you're saying. But part of what I am doing is to deprive people of spectacle. There are enough of those in the world and they are just a distraction. Frustration, boredom and anger are much more interesting reactions to produce."  Space Closed By Corrugated Metal was taken down yesterday. It will be replaced by another artwork that will amount to a companion piece to the one that involved Lucca prostitutes. So are you going to get more prostitutes to assume positions for money? "No. Instead, we've been getting in touch with long-term unemployed men to participate in the project." So you're going to wrap male genitals in polyurethane? "I'm not going to tell you because I don't want to spoil it."  Sierra started out making sculpture and installations, and later introduced human beings into his work. In a piece called P.S.1, he put a brick wall diagonally across a gallery floor. Behind the wall was a person who had been hired to live there for 15 days. Food was slid under a narrow opening. He once paid drug-ad dicted prostitutes the price of a shot of heroin to have their backs tattooed. At the Venice Biennale last year, Sierra hired 200 immigrants from Africa, Asia and eastern Europe who had dark hair to take part in a so-called action that involved bleaching their hair. His idea was to highlight (even literally) the exploitation of non-western labour in the west, and to comment on notions of otherness and strangeness.  In South Korea, he paid 68 people to block the main entrance to the inauguration of Pusan's International Contemporary Art Festival. Each wore a sign saying: "I am being paid 3,000 wons [£1.90, twice the country's minimum wage] per hour to undertake this job."  Why does Sierra treat participants in his projects as objects used to do fatuous things? "This is basically something I'm taking from reality. People are used to achieve certain ends. They're willing victims employed apparently in order to get rich. That's absurd."  But why, in the face of this naked exploitation that deprives labour of any dignity, don't Sierra's subjects pin him to a gallery floor and beat him with a large sock filled with manure? "It amazes me that people don't attack me or, very often, the works. I do get annoyed when we speak of these people as 'them'. Artists are no better. Joseph Beuys once claimed that there was clean money and dirty money. We should only take the former. I don't believe that: there's only dirty money. And as an artist I take dirty money. I'm paid to create luxury goods for art collectors."  But is there a way round that for a clever artist like Sierra? You should opt out of the capitalistic art market by problematising, ideally in a dialectical way, the commodification of aesthetic experience in the postmodern age, I suggest (smiling). "What does that mean?" asks Sierra. That you shouldn't create objects that can be bought. "That's easy for you to say," says Sierra. "But I've got to make a living." So everybody gets corrupted? "That's the truth that lots of people, including conceptual artists of the 60s and 70s, did not really recognise. We all have dirty hands."  But Sierra still considers himself a political artist. He is one of seven Mexico-based artists taking part in a show called 20 Million Mexicans Can't be Wrong at the South London Gallery. Sierra's project, he says, is an attempt to export to the west the political turmoil produced in the south by economic globalisation.  "The problem now is that it's hard to be an artist and make the west sit up and take notice. It's difficult to do that, especially in an Anglo-Saxon country such as Britain." Why? "Because of September 11." Sierra is very conscious that artists, from Karlheinz Stockhausen to Damien Hirst, have taken the World Trade Centre bombing to be a powerful art work. "They're talking about the visual impact of those events. But they miss the great invisible art work of the Gulf war. That was just as potent but less visually striking."  So who's the better artist, Bush Senior or Bin Laden? "It's impossible to say. But both of them make my job harder."  · 20 Million Mexicans Can't Be Wrong is at the South London Gallery, tel 020-7703 6120 for details. Part two of Sierra's work at the Lisson Gallery runs from October 16, tel 020-7724 2739.
Prostitutes' genitals cast in polyurethane. Labourers paid to masturbate. And now, for his latest installation, Santiago Sierra has boarded up a gallery with corrugated iron. Stuart Jeffries meets the man who loves to wind up the art world