Taking life challenges and starting points into account is more of a meritocracy, because you are accounting for the difficulty they had to get to where they are.
For example, say you have two kids with the same high SAT score. One kid has been given every chance to succeed - test prep, rich parents, best schools money can buy. The other kid was raised by a single parent in a poor neighborhood at a bad public school with no test prep or anything like that. They have to work a job to support their family. On paper they have the same score, but the 2nd kid clearly has more merit, in my opinion. They would likely surpass the other kid if given the same privileges they had.