Granted, the Joker's plans and goals operate on a completely different social aesthetic than anyone else, but his methods of accomplishing those goals are always quite rational.
Take the goal of blowing up a dam for example. An insane person would just throw his own feces at the dam or anything else until something else draws his attention. The Joker, however, while he may uses a lot of clowns in an overly elaborate stunt, will indeed use explosives in accomplishing the goal and will be far away from the explosion when it does go off. See the difference?
Criminal? Yes. Insane? Hardly.
Perhaps the lunacy bit is just a dodge for the Joker to keep people from realizing how in control of his actions he really is and in this sense, perhaps he is smarter than Batman.