You would need, to quote Oscar Wilde on the death of Little Nell, a heart of stone not to laugh. James Murdoch, the new chief executive of British Sky Broadcasting (and the son of guess who?), tells the Financial Times that, to fill the vacancy, "we worked with one of the most respectable search firms in the world" and that "I was on the sharp end of that process". Lord St John, a non-executive director, explains on the Today programme that, of all the young men in the world, young Master James stood out for his brilliance. (Lord St John, by the sound of it, would have had little hesitation supporting the appointment of a horse to the Roman senate.) But the issues behind his appointment are more complex than they look. As Patricia Hewitt, the Trade and Industry Secretary, pointed out here last week, we, the people, now own most of British industry through our pension and savings funds. In theory, the fund managers - who, also in theory, are accountable to us - could have kept Mr Murdoch out, because 64.6 per cent of BSkyB is owned by outside investors. At the merged Carlton-Granada ITV company, indeed, where there is no equivalent of the Murdoch family's control of more than a third of the shares, Michael Green, the chairman, was booted out by the fund managers.

But are we quite sure that a chief executive appointed by Barclays Global Investment or Morley Fund Management would be a better thing than one appointed by Rupert Murdoch? One of the paradoxes of modern capitalism, particularly in Britain and America, is that nearly all its worst features - its short-termism, its environmental irresponsibility, its eagerness to put people out of work, its preference for gigantism and uniformity, its carelessness of honest accounting, its general lack of charity and public-spiritedness - are largely down to institutional investors acting on our behalf. They demand high and quick returns because that is their brief: to maximise our pensions and savings. We the people are not benevolent owners; on the contrary, we are the most ruthless capitalists of all, devoted to short-term gain and wholly devoid of social conscience. Just as we pocket tax cuts with little thought for the consequences in public services, so we seek high pension and investment returns with scant regard for corporate ethics. It is part of the genius of modern capitalism that it has thus implicated most of the population in its nastiest aspects - and, as governments encourage more private pension provision and offer tax concessions for investment and savings schemes, it will implicate us ever more. True, most people don't have a clue what their pension or savings funds are up to but, even if they did, it is doubtful that they would want to change their priorities significantly.

This is not to suggest that the Murdochs have much of a care for the common good, nor to deny that News Corp has a record of crushing its competitors and debasing culture. It is simply to observe that Master James, who comes from a family that has a proven record of commitment to the media and has himself little use for quick profit, may well be preferable to Mr Quick Buck, eager to pile short-term value on his share options, who would be favoured by the fund managers. He is more likely to get on with the "company building" that commentators such as Will Hutton so ardently desire. His father, for all his faults, has never been an asset-stripper. Nepotism, particularly where it leads to the appointment of complete incompetents (probably not the case with young Murdoch), is deplorable, but meritocracy is often uglier. Devils and deep blue seas come to mind. The old-style private family company often behaved better, for employees and the community, than the modern, publicly quoted conglomerate, because it was not obliged to concern itself solely with profit.

The thrust of new Labour's reforms of corporate governance is to give more power to institutional investors and to prevent the kind of boardroom stitch-up that led to Master James's appointment. "Accountability" is the watchword. But we are not talking here of accountability for damage to the environment or to redundant workers. Rather, we are talking about turning companies into more ruthless profit-making machines and giving capitalism another of the spring-cleans it periodically needs in order to maintain public confidence. A centre-left government's real challenge is to find ways, first, of obliging companies (public or private) to put social responsibilities on an equal footing with their profit-making responsibilities and, second, to encourage firms that have explicit aims of social improvement. Meanwhile, we are left with a rather sad world in which, if you want acceptable faces of capitalism, a Murdoch is about as good as it gets.

Witnesses to honesty

The Office for National Statistics is unable to give reliable figures for economic growth, while new Labour ministers cannot admit they have ever got anything wrong. Both can learn from The Lord's Witnesses as they wrestle with the run-up to the Battle of Armageddon (due in March 2008). In press advertisements, they keep us appraised of their thinking and do so with model transparency. For example, they predicted that, in October, the UN Security Council would expand to ten permanent members. This was foretold in the Bible, but unfortunately in code. "Evidently we were wrong once more," says the latest advertisement. The revised date is 29 November. This "is our 17th attempt to get this date correct". Which, when you think the Tories changed the basis for calculating unemployment figures 19 times in 18 years and these people are trying to sort out the end of Satan's 6,000-year lease on the planet, is not bad at all.