BOSTON -- "Tip" is barefoot on the beach, posing for American Express ads. "Teddy" is on a diet, a dropout from presidential politics. And in this city, where politics is such a preoccupation that every leader is known by his first name, all the talk is of the man they call "Michael," not "Mike."

Gov. Michael S. Dukakis' only nickname is "the Duke," a mark of respect more than affection. He is an enigma to the Irish pols who say they have no trouble understanding Teddy (Sen. Edward M. Kennedy) or Tip (former House speaker Thomas P. O'Neill Jr.). Kevin Harrington, the state Senate president in Dukakis' first term and now a high-powered lobbyist, calls him "the single most puzzling political figure I've ever known," and many agree.

Democrat Dukakis was swept into the big third-floor office under the gold dome in the Watergate election of 1974, a reform-minded ex-legislator running in a year when "clean government" was very much in fashion. He was washed out four years later, beaten in the Democratic primary by Edward J. King, a Reaganesque businessman/politician of no special distinction, who simply gathered in the multitude of voters Dukakis had alienated.

Had that been the end of it, Dukakis' place in Massachusetts political history would have been like Jimmy Carter's national reputation after the 1980 election. He seemed startlingly like the Georgian: a small, smart fellow with a disciplined mind, dogged work habits and a love of detail; a man of such humorless self-righteousness that he alienated most of the politicians around him; a man with visionary ideas but a distaste for traditional politics, and, finally, a one-term incumbent defeated by a challenger he plainly considered his inferior.

But that was not the end for Dukakis. Defying F. Scott Fitzgerald's observation that there are no second acts in American lives, he created one of his own. In 1982, he gained a hard-fought rematch victory over King.

Back in office, he displayed a supple new political negotiating style that captured former antagonists in the legislature and business. He won passage of innovative social welfare and economic development programs and, riding a boom to which he was but one of many contributors, he cut tax rates at the same time.

While critics complained that Dukakis had veered into total pragmatism, the voters gave him a victory with 69 percent last year. Once reelected to a third term and notably relaxed for perhaps the first time in his 53 years, the man who had never wanted to be anything but "the best governor Massachusetts ever had" set his sights on the presidency -- leaving the statehouse pols to wonder even more what makes Michael run.

The answer lies in his genes -- and in his rearing. He is a second-generation overachiever. Whatever Dukakis has done -- or may do -- pales in his mind beside his Greek immigrant parents' accomplishments. His father came to America at 15, speaking no English, and eight years later talked his way past a skeptical admissions official and into Harvard Medical School. His mother was 9 when she landed and did so well in the Haverhill public schools she was admitted to Bates College in Maine and became a teacher.'Standards Were High' at Home

Not surprisingly, the governor recalls that "standards were high" in his home. "Doing well in school was something that was expected of you. Discipline was strict. Lots of chores. We always earned our own spending money. Life was comfortable but by no means lavish. And the rule was: No special privileges."

The elder Dukakis was a family doctor who reputedly managed more than 3,000 deliveries, from which the governor is still reaping political dividends. "I was in Orlando the other day and a priest came up to me and said, 'Your father delivered me,' " Dukakis observed. "If anybody helped me understand that service to others was the most fulfilling thing you could do in this world, it was my father. He worked seven days a week. He almost never took vacations."

Dr. Dukakis was "pretty conservative politically"; his wife, more liberal. Young Michael caught the political bug early: "I remember at the age of 7 sitting in our living room with my brother, who was 10, listening to the Republican convention, and taking down the delegate votes, state by state."

Dukakis was an honor student at Brookline High School, student council president, a 5-foot-8 guard on the basketball team, tennis player and -- most seriously -- cross-country runner. In his senior year, he entered the Boston Marathon and finished 57th in a field of 191. "The marathon was something all of us watched," recalled his friend Haskell A. Kassler, "but none of us dreamed of running it. Michael trained, and did it."

He chose Swarthmore College, an intellectually rigorous, politically liberal Quaker school outside Philadelphia, switched out of his pre-med course after his first year of physics, but indulged his growing interest in politics -- both on and off-campus. Having grown up with two languages at home, Dukakis added French, Spanish and Italian in college, spent a summer in Central America and, after graduation, volunteered for the Army and went to Korea -- where the diligent student learned that language as well.

Back home, he entered Harvard Law School and graduated in 1960 just in time to watch the Democrats nominate Brookline native John F. Kennedy. Today, Dukakis says: "There were two figures in my early political life who had the greatest impact on me: Joe McCarthy and Jack Kennedy. McCarthy outraged me and Kennedy inspired me."

Even before he finished law school, Dukakis plunged into politics in Brookline, a close-in Boston suburb that had seen its early Yankee Republican and Irish Democratic populations joined by increasing numbers of middle- and upper-class Jews. Then as now, many of Dukakis' close friends and political allies were Jewish -- as is his wife, Kitty. Martin Linsky, a Brookline Republican, recalls that in the l960s, Dukakis liked to tell the story of the elderly woman he met in his first campaign who asked, "What is a nice Jewish boy like you doing with the name Dukakis?"

In that 1962 race, Dukakis was elected as a state representative. "He was a force from day one," said Frank Hatch, a Republican who entered the state House the same day as Dukakis. "The rest of us took two years to figure out what we were doing, but Michael came with a whole sheaf of bills -- to put utilities underground, to curb outdoor advertising. He had his whole agenda."

Asked to describe Dukakis' political values and personality, Hatch said, "He's not essentially a very warm person. He's kind of a technocrat." That word recurs in interviews and may explain why -- despite continuing enmity from many older businessmen -- Dukakis has won support from some of the new players in Massachusetts' high-tech community.

Mitch Kapor, the sport-shirted whiz who built Cambridge-based Lotus into the world's largest software company, said, "Dukakis was pretty hostile or indifferent to business the first term, but . . . he understands the entrepreneurial climate now. He's quick and he's smart, and he's not afraid to admit he doesn't know things. You can actually have a conversation with him."

The man the Yale- and MIT-trained Kapor finds "a very straight, unpretentious person" can be intellectually intimidating, culturally distant to many others. "He's an ethnic to most of America, but he's no ethnic here," said Tommy O'Neill, Tip's son and Dukakis' first-term lieutenant governor. "Ethnics come from working-class neighborhoods. Michael doesn't. We deal with constituencies. He deals with issues. Michael is more like a Yankee."Yankee Characteristics

Eunice Howe, a prominent Brookline Republican who has been appointed to two regulatory commissions by the governor, says she learned to deal with him as she once dealt with that quintessential Brahmin politician, Elliot Richardson: "You marshal your thoughts; you make a list. He has no time for small talk."

Others add to the list of Yankee characteristics. He is serious, strait-laced, orderly, economical to the point of being stingy. In every way, Dukakis' public actions reflect the private values instilled in his youth. "Neatness is important to him," Transportation Secretary Frank Salvucci said. "You look at his vegetable garden and everything is lined up and neatly weeded. He doesn't like disorder. He goes nuts when he sees graffiti on an overpass."

Dukakis was never at home in a legislature that thrives on patronage and palship. His biggest achievement -- cited in all his current campaign literature -- was the passage of the nation's first no-fault insurance law. To get it through, Dukakis had to beat the powerful trial lawyers' lobby. George Keverian, now speaker of the House but then a back-bencher, recalls, "There was almost a sense of history as we neared the vote. Dukakis handled the debate so well that members stood and applauded."

But there is a sequel to the story. Another fellow legislator recalls that when the no-fault bill went to a House-Senate conference committee, Dukakis was so adamant about even minor provisions that he had to be removed from the conference, lest the whole measure die.

Dukakis says he cannot remember the incident and would be "surprised" if it had occurred. But then-speaker David Bartley confirms "that was the case. Someone came to me and said, 'If it's not going to go down the drain, you better get him out of there.' Michael has to be given major credit for the legislation. But he did have the messiah complex back then, even on small details."

After eight years in the legislature -- although Boston Globe columnist Carol Liston wrote that "Dukakis does not have a single political ally in the upper ranks of the Democratic Party" -- he put together a grass-roots organization good enough to gain the nomination for lieutenant governor, beating out a more senior Brookline legislator, Beryl W. Cohen. But the ticket lost to the Republicans. In 1974, he ran for governor, and the out-of-office lawyer beat the Democratic attorney general in the primary and the incumbent Republican governor in November. He was no sooner in office than he was in trouble.'He Alienated Everyone'

Dukakis had run on a pledge not to raise taxes, but inherited a deficit and a declining economy. Cornered, he raised taxes -- and slashed welfare benefits. "He alienated everyone," recalls then-Senate president Harrington. "Business, labor, the teachers, the state employes -- you name 'em, Michael did something to tick them off. It was a disaster."

As public support dwindled, Dukakis was further damaged by his abrasive relations with legislators such as Harrington, for whom he had shown near-contempt. They in turn lost no opportunity to humiliate him.

William M. Bulger, then majority leader and now Senate president, recalled that because Dukakis advertised his dislike for smoking, "we'd all light up cigars" before going in for a meeting with him. "Even guys who never smoked would light up."

As relations deteriorated, a quiet conspiracy developed among staff aides to save Dukakis from himself. Tommy O'Neill recalls that the phrase "Don't tell Michael" became a prelude to discussions -- often involving Kitty Dukakis -- about backdoor political stratagems. But they were unavailing. His defeat at King's hands in the 1978 primary surprised no one -- except the governor.

Kitty Dukakis has called it "a public death." The governor was so depressed, she said, "that at one point I was really worried about him." Dr. Nicholas T. Zervas, a neurosurgeon at Massachusetts General Hospital and a friend, calls the defeat "the single most influential thing that ever happened" to Dukakis. "He blamed it totally on himself. It took him quite a while to get through the tremendous pain and humiliation and guilt; he felt he'd let people down."

When the pain subsided, Dukakis methodically began to restructure his approach to political life. "He became a substantially different person," said Paul Brountas, a friend since Harvard Law School days. "He realized that thousands of people . . . thought him cocky and arrogant. He learned a degree of humility."

Dukakis spent the unwanted sabbatical at Harvard's John F. Kennedy School, where he is remembered as an excellent teacher. He emerged as what one associate terms "a disciple of Dunlopism." The reference is to John Dunlop, a Harvard professor and former Republican secretary of labor, who is a masterful labor-management mediator. Dukakis became his pupil.

By Dukakis' account, "I learned how to listen, how to think a little bit longer before I do things. I learned to do better at building coalitions. I understand a lot better than I did that you've got to involve people from the beginning in what you're doing -- legislators, constituency leaders -- and if you involve them, you get not only greater commitment but a better product."

Kitty Dukakis saw the changes even in their family life. As their three children (now ages 19 to 29) grew, family debates became more frequent. "Michael doesn't intimidate his children in any way, shape or form," she said. "They express their feelings to him -- all of them."

And Dukakis learned to respond to family dissent. Earlier, Kitty Dukakis said, "He didn't know how to argue." When "Michael and I would have a disagreement, I would carry on and be very emotional about things. And his way of handling it would be not to talk anymore . . . . He'd state his opinion and he would think that was going to be it. Well, I wasn't going to accept that as being gospel."

Then she added an observation that many others make: "Michael is so bright and quick that people used to be intimidated by his skill and intelligence . . . . I think he began to recognize during that period that he was out of office that what happened oftentimes was that he stifled the give-and-take in discussion. I just think he's a more open person, who invites disagreement more often than he did."

Before the lessons could be applied, Dukakis had to regain office -- which he did after a brutal rematch with King in the September 1982 primary. The campaign was managed by John Sasso, a recruit to the Dukakis circle from the staff of liberal Rep. Gerry E. Studds (D-Mass.) and the 1980 Kennedy-for-president campaign, who has become Dukakis' indispensable right-hand man and widely admired alter ego.

Dukakis and Sasso built the biggest grass-roots organization Massachusetts had seen and then went after King, hyping scandals in his administration into a caricature of corruption. Dukakis won a primary victory with 53 percent and had an easy time with a Republican in November.

The second-term trip was as smooth as the first term had been stormy. Dukakis inherited a healthy economy from King, and saw it flourish. And he set about using "Dunlopism" to defuse opposition and design innovative social and economic programs.

Dukakis told interviewers he was finished with "going down a thousand blind alleys," and would concentrate on achievable goals. From advisory panels representing adversary constituencies came recommendations for "right-to-know" laws aimed at safeguarding workers against workplace hazards, a package of programs designed to help workers facing layoffs or shutdowns, and a variety of education, welfare and economic-development measures.

Dukakis and Sasso moved the bills through the legislature, making sure there was plenty of credit for allies. They devised innovative financing, zoning and training for firms wishing to expand or relocate in Massachusetts, for urban development projects and for low- and moderate-income housing programs, some developed in coooperation with construction unions.

This "New Deal-Making" politics of the last five years gave Dukakis full vent for his governmental activism without requiring him to sponsor the kind of Democratic programs that aroused the ire of the business community and brought down the label of "Taxachusetts" during his first term.

Continuing economic growth cut the commonwealth's unemployment rate from 3 points above the national average in his first term to 3 points below the national average in the second. Tax rates went down even as revenues for state programs increased.

It is this "Massachusetts Miracle" of economic and social policy he is showcasing in his campaign -- with a bit of hype around the edges of his solid achievements. Dukakis rarely acknowledges his debt to the Reagan defense buildup; indeed, he criticizes the spending priorities that have seen Massachusetts firms' military prime contracts jump from the $3 billion annual level in his first term to almost $9 billion last year. He also rarely points out that one reason Massachusetts' unemployment has dropped below 4 percent is its stagnant population level. Expensive housing discourages people from migrating to the state.

The most thorough study of the state economy, by Harvard's Ronald F. Ferguson and Helen F. Ladd, concludes that Dukakis' policies probably helped spread the economic growth to lagging areas but were not "an important catalyst in the economic turnaround of the past decade."

The heavily publicized welfare reform -- Employment and Training Choices, or ET -- provides job training, day care and transportation help to welfare recipients on a voluntary basis. Since it began in October 1983, officials say, ET has been moving about 600 people a month off welfare rolls and onto payrolls at an average salary of $13,000 a year.

Beneficiaries of the program, appearing on platforms with Dukakis, speak movingly of the pride they feel in becoming self-supporting. But official records show the welfare caseload has declined just 4 percent since ET began and welfare-rights advocates complain that benefit levels are too low.

Up close, there are other chinks in the armor of Dukakis' gubernatorial record: financing problems in the programs to aid laid-off workers; enforcement problems on the "right-to-know" law; disputes over application of environmental laws; overcrowded prisons; serious pollution in Boston Harbor; terrible rush-hour traffic jams.

Dukakis' critics cite a series of "flip-flops": He fought the property tax cap but then accepted it, boosting state aid to the cities as a substitute; he opposed raising the minimum drinking age to 21 and then endorsed it and set up a national-model enforcement program; he imposed a surtax in his first term, questioned the advisability of its suspension early in the second term, then tried to leapfrog his critics by calling for its immediate repeal.

But Dukakis has stifled most criticism at home and has won praise from state and local officials nationally. He enjoys an esteem among governors of both parties that the last two presidents, Carter and Reagan, did not have in their statehouse days.

Despite this national acclaim, here at home the caution and pragmatism of the second term, motivated less by presidential ambition than by a fixation on a vindicating reelection in 1986, have blurred the sharpness of Dukakis' early "profile in courage" and raised questions about his fundamental values.

Barbara Anderson, the head of a populist antitax group often at odds with Dukakis, said "I feel contempt" for his capitulation to a recent legislative pay raise passed as "emergency" legislation. "He just won't stand up and fight."

Scott Lehigh, a more sympathetic critic, wrote in The Boston Phoenix in April that Dukakis' "value-neutral government . . . is an administration guided by little besides the concepts of efficiency and competence, qualities that can serve any ideological master . . . . His bland responses to the issues of the day are driven not by impassioned imperative or dedication to a cause but by nothing more noble than the desire to keep his constituencies placated and controversy at a minimum."

Many do not find that terrible. Arthur S. Osborne, president of the Massachusetts AFL-CIO, acknowledges that Dukakis' artful compromises "have kept us just short of getting mad," but adds that he has no beef with a governor who says, "The door is open; come in and prove your case." John Gould, senior vice president of the Shawmut banks and top lobbyist for "the Vault," a committee of Boston's largest employers, welcomes the shift from the "dogmatic, inflexible" Dukakis of the first term to the "totally open-minded governor."

But Dukakis insists that the perception of an inveterate compromiser is one "I don't buy . . . . I can give you a flock of initiatives around here which are as progressive, as strong, as far-reaching and, in some cases, as pioneering as anything in the country. I think they gain from being the products of a process in which there has been a lot more involvement and participation . . . . I don't know that it makes sense to invite confrontation if you can do things without confrontation."

On some civil-liberties issues, Dukakis clearly has not budged an inch since the start of his career. He has successfully opposed the death penalty, despite polls showing most voters favor it. He has supported public financing of abortions. But he is regularly picketed by gay activists for what they see as roadblocks he has built against foster-home placements with homosexual couples.

The health of cities has been a major focus from the beginning. In housing and public transportation, Massachusetts has expanded state programs as the federal government has cut back. While not a leader in education reform, Dukakis has pumped lots of money into public education at all levels.

One priority no one questions is the importance of Kitty Dukakis in her husband's private and political life. She is as intensely emotional as her husband is cerebral. Old friend Haskell Kassler said, "Michael loves and respects her -- and her causes," but insisted that it is a mistake to assume, as many do, that "Kitty is the driving force in the family."

During Dukakis' 1982 rematch with King, Kitty Dukakis told an interviewer it was "hogwash" to suggest that she could "make decisions for him {Dukakis}. Michael is his own person." But she told The Washington Post that she and her son John agreed far earlier and more easily than Dukakis that he should run for president this year, and they did not keep their sentiments secret. Senate President Bulger needled the Dukakises at his St. Patrick's Day fete last March by telling the crowd, "We're very honored to have the next president of the United States here and {looking directly at Kitty} the next vice president."

"Kitty has ideas," said family friend Paul Brountas, "and in the first term she was criticized for expressing them firmly." She went onto the state Senate floor to lobby for her causes until Kevin Harrington admonished her to let him handle the agenda.

"I've gotten better, believe it or not," she says now with a laugh. "I was wilder when I was younger." But her influence is undiminished. She has two state-salaried assistants in the governor's office, who work with her on refugee resettlement problems, adult literacy projects, assistance to women in prisons and the homeless shelter commission her husband asked her to head in 1983.Seen as Bright but Boring

Massachusetts politicians of both parties have long known what Dukakis' Democratic rivals are only now beginning to understand. "He should never be underestimated," advised Steven D. Pierce, the Republican minority leader of the House. "He's very bright. He's good on his feet, single-minded and hard-working. He's a quick learner and he has a very competent staff," full of men and women Dukakis brought back from his sojourn at Harvard.

What Dukakis apparently lacks is the passion that fuels memorable speeches -- and the humor that melts opposition even from the unpersuaded. In a city notable for its political ribbing, House Speaker Keverian marvels that Dukakis "doesn't kid and doesn't clown . . . and he's proved that if you're a bore, you can end up running for president."

Dukakis is not spared others' humor, of course, and his seriousness is their favorite target. "The governor is worried sick about finding money to depress the Central Artery {a major downtown highway}," Keverian tells audiences at fund-raising "roasts." "I've advised him to treat the highway just like he treats the legislature: If he talks to it, I guarantee it will get depressed."

Even admirers such as Mitch Kapor concede "it's a question the campaign will have to answer -- if he can have an impact speaking out on larger, broader issues." An adviser worries that Dukakis' distaste for the big, emotional issues and his preference for "process questions" could deepen the suspicion that "he is not willing to take big political risks. It's the political side of his cheapskate reputation."

But Dukakis' cool serves him well on television, a medium he mastered in the early 1970s when he moonlighted as moderator of public television's "The Advocates."

Dukakis already has demonstrated he can raise as much money as any of the Democratic contenders, and he has gained strong early footholds in the northern tier of states from New England to Wisconsin and Minnesota and out to Washington and Oregon. Whether he can overcome southern suspicion of the stereotypical Massachusetts liberal Democrat, which many who do not know him presume him to be, is still untested.

But as Beryl Cohen, the Brookline politician he bested for the 1970 lieutenant governor's nomination, said, "He will kill them with hard work. You have to remember, cross-country is his sport. He has learned to run and run and run -- until it's over. Michael will not break stride; he will hit every mark."