Our guiding light is, quite simply, whatever we want / desire in life - e.g. what makes us feel happy and safe. You haven't said this explicitly, but you seem to have intuited it.
All of the concepts we give rhetorical value to, like 'merit' and 'equality' are just heuristics for bringing about those things we want (well-being, happiness, etc). Because as you said, awarding 'merit' does have some correlation with positive outcomes for our well-being. And similarly, societal equality also has some bearing on individual well-being, happiness, and safety.
But we lend far too much rhetorical weight to such things. 'Merit' and 'Equality' are just rules of thumb for achieving happiness and safety. They are a means to the goal, not the goal itself. And therein lies most of the confusion of modern society.
BTW, you might be interested in these two articles, which have some similar themes to this one:
