If you like the first theory, then it doesn’t matter which courses students take, or even what is taught in them, as long as they’re rigorous enough for the sorting mechanism to do its work. All that matters is the grades. If you prefer the second theory, then you might consider grades a useful instrument of positive or negative reinforcement, but the only thing that matters is what students actually learn. There is stuff that every adult ought to know, and college is the best delivery system for getting that stuff into people’s heads.
A lot of confusion is caused by the fact that since 1945 American higher education has been committed to both theories. The system is designed to be both meritocratic (Theory 1) and democratic (Theory 2). Professional schools and employers depend on colleges to sort out each cohort as it passes into the workforce, and elected officials talk about the importance of college for everyone. We want higher education to be available to all Americans, but we also want people to deserve the grades they receive.
I’m firmly in the Theory 2 camp, although my pre-medical track education was more along the Theory 1 path. I’ve been meaning to post a link to this very interesting commentary by Menand for awhile. We don’t have to think about college much yet, but I found much in this article interesting and applicable to education at any level and in particular to homeschooling and how I go about thinking about the how and why of how we spend our days.