Popular wisdom is often anything but wise. One statement that irritates me is the oft repeated complaint that "These days, it's not what you know, it's who you know." This sentiment is objectionable because it implies that there was once a golden age of meritocracy from which our society has fallen, and that there is something terribly wrong with favoritism.
It is obvious to anyone with an historical perspective that we are living in an exceptionally meritocratic age. In an increasingly individualistic world, our lives are less and less intertwined with our church, our neighbors, or even with our immediate families. We may "know" more people through facebook, but we have real relationships with fewer and fewer people in our postmodern isolation. In an agricultural society, people worked primarily with their family and neighbors, often for their entire lives. Today, people rely much less on local ties and much more on their particular set of skills. Someone can get a job by sending out resumes to people around the world who have no previous connections with the the applicant.
Society should be a meritocracy to some degree. People with the highest skill levels should generally rise to more powerful positions in their field of expertise. However, such technical competence is not always sufficient. The character of a person matters a great deal, as do the bonds between persons that are essential to a functioning community. Someone who knows a man personally and has a positive impression of his character will naturally be more likely to hire him or recommend his services. In addition, the ties of friendship and family that stimulate favoritism are in and of themselves good things. For a a store owner to hire his son as a cashier over a more qualified stranger is nepotism, but it is a good act of nepotism.
Favoritism ought to have some limits of course. Favoritism should not be applied simply out of a selfish desire for favors reciprocated. If your child is an idiot, you shouldn't hire him to run your company. Some people, such as nuclear warhead technicians, should be hired strictly on the basis of their qualifications. The comparative emphasis placed on personal relationships and competence should vary with different situations.
The world should not be run exclusively on the basis of favoritism, but it is good that we are are carried through our lives not only by what we know, but also by who we know.