That's the thing, merit can be defined however we want be any value system.

One could define it as any of the things you said. I can define it as bringing happiness or health as easily as boosting profit, and if I wanted to facetiously make a point I could define it as strength or even "being closely related to previous leaders".

What is deemed as merit is itself a statement of what has highest value under that system.

Under Capitalism the merit that's rewarded, in my eyes, is the ability to make money.

I personally, would rather a system that places ability to support peace and raise quality of life as the merit that is rewarded.

I haven’t yet expressed an opinion on capitalism, except to say that the features you’ve mentioned have little to do with it.

But to answer your original question: capitalism stricto sensu is when the profits and decision-making power in a firm are vested in those who put up the original financial capital. It incentivizes financial risk-taking, which (depending on economic conditions) can be useful or destructive. But the only merits it rewards are the possession of pre-existing wealth, the willingness to take risks with it, and luck. Nepotism and cronyism serve its ends by providing a source of wealth for new capitalists, and an outlet for successful capitalists to convert their gains into social rewards.