360 Degree: Grades

One of the first things that comes to mind when you think of school is grades. But, are grades important? Are they necessary?
School should be about learning, not about how well you do on a test. Why must we quantify learning? In doing so, learning no longer becomes enjoyable. It becomes a chore, a drudgery. You study to pass a test, not for yourself. Education becomes a game of survival where those who are most successful have the most opportunity. How high you climb in social ladder is determined by your grades in high school or even junior high. Should the weight of that all be placed upon the shoulders of adolescents who at that period in their life want nothing to do with school, unless, in my personal opinion, something has gone haywire in their head.
Without grades, where would the world be? Some people have to succeed and others have to fail in order for the world to function. Grades are a way of determining who those people are. Also, how would be know if a child needed help in an aspect of their learning if grades didn't show that to us? And, is there another option other than grades and test scores to determine those most in need? Without the competition in schools, how can we get students to achieve their full potential if there is no incentive? What I see when this happens though, is that there are some students who attempt to reach the incentive, and then there are others who decide that it is impossible to achieve and stop trying. Is is possible to find a middle ground or an alternative measurement for success?