All modern states and societies belong to one of these two categories: meritocracy or oligarchy. In both cases, the social and economic structures are controlled by elites. In this complex world, the rule of elites is inevitable. The amount of knowledge needed in order to exercise effective government has become so large that only a select few can attain it. What differentiates meritocracy from oligarchy is not the absolute number of members of a ruling class - the number is surprisingly small in both systems. The difference between them lies in the membership criteria and in the way that they are applied.
Meritocracy is a "fair play" approach: play by the rules and you have a chance to benefit equal to anyone else's. Meritocracy, in other words, is the rule of law. What characterizes oligarchy is the extensive, relentless and ruthless use of "transcendent" parameters. It is an accident, an occurrence absolutely beyond the reach of those most affected by it. Race is such a parameter. So are gender, familial affiliation or contacts and influence.
An oligarchy tends to have long term devastating economic effects. The reason is that the best and the brightest—when shut out by the members of the ruling elites—emigrate. In a country where one's job is determined by his family connections or by influence peddling—those best fit to do the job are likely to be disappointed, then disgusted and then to leave the place altogether. Capable, well–trained, educated, young people leave their oligarchic, arbitrary, countries and migrate to more predictable meritocracies.
This is colonialism of the worst kind. The mercantilist definition of a colony was: a territory which exports raw materials and imports finished products. The Brain drain is exactly that: the poorer countries are exporting raw brains and buying back the finished products masterminded by these brains. Yet, while in classical colonialism, the colony received some income for its exports—here the poor country pays to export. The country invests its limited resources in the education and training of these bright young people.
The Brain Drain is so serious that some countries lost up to a third of their total population. Others lost up to one half of their educated workforce (for instance, Israel during the 1980s).
Oligarchy and meritocracy are two end-points of a pendulum's trajectory. So, why did oligarchs emerge in the transition from communism to capitalism? Because it was not a transition from communism to capitalism. It was merely a bout of power-sharing: the old oligarchy accepted new members and they re-allocated the wealth of the state among themselves. The drive for privatization of state enterprises in most East and Central European countries provides a glaring example: the national wealth was passed on to the hands of relatively few, well connected, individuals, at a ridiculously low price.
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