Capitalism, an innovative and viable system?
First, nothing remotely like capitalism exists. Is the US economy, relying crucially on the dynamic state sector, a capitalist economy? But putting that aside, was it an argument in the 18th century to say that feudalism, absolutism, rule by Kings, slavery,.... are the only viable systems because they are the only ones still functioning? Or in the 1960s to say that women can't be granted elementary rights because such rights aren't granted in any viable system? Or that freedom of speech must be blocked by state power for the same reason? This is beyond absurdity.
Is "capitalism" supposed to be something like the system in the US? Or Japan? Or...? If not, we are proceeding in outer space. If so, then it is unfair to say that the claims are unargued: they appear to be instantly refuted even by the most superficial examination. Has great science, art, music, etc., been produced by people working for money? Is that what was driving Einstein when he was working on relativity theory in the Swiss patent office, or later at the Institute for Advanced Study? Or artists struggling for years on crusts of bread in garrets? Or artisans throughout history, and today, trying to create objects of beauty and perfection? Or parents devoting time and energy to raise their children properly (creating "human capital," in the terminology of economists, a major factor in economic growth)? Or in fact just about anything worthwhile or constructive? The unargued claims...are apparently being put forth by people who do have not had even the slightest experience, direct or indirect, with creative work, now and in the past -- and by "creative" I do not mean only the peaks of human creativity, but the lives of most decent people who are not utterly pathological.
Suppose that there is some miraculous difference between scientists, artists, artisans, parents, etc., and those seeking to produce marketable goods -- a near-lunatic assumption, but let's adopt it for the sake of argument. So take the core of the fabled "new economy," for example, what you and I are now using: computers and the internet. How were these developed? Answer, pretty much like most of science, the arts, crafts, etc. All produced in labs, often for decades, mostly within the dynamic state sector of the economy, with essentially no consumer choice or entrepreneurial initiative. Unless you count the "entrepreneurial initiative" of IBM executives who realized that they could use public resources, like the MIT Whirlwind and Harvard Mark series of computers in the 1950s and the work going on in the labs, to learn how to switch from punched cards to electronic-based computing, or their "entrepreneurial initiative" in relying on government procurement (that is, unwitting public subsidy) to develop more advanced computers in the 1960s, or the initiative of AT&T to rely 100% on government for procurement of high quality transistors ten years after they were invented (largely using government-produced technology, and within a great lab that AT&T, theoretically private, was able to maintain at public expense by charging monopoly prices, thanks to government protection), and so on. I happened to be in the electronics lab where a lot of this was going on at the time, but even the most casual acquaintance with the history of technology, hence the source of the modern economy, reveals that this is completely standard: people working very hard, all hours of the night, because they find their work fascinating and are passionately interested in finding out the answers to hard questions, just as artists labor often in penury to satisfy their inner creative needs, parents devote enormous efforts to "producing human capital" (in the familiar ugly terminology), etc. Most of human life, in fact, for anyone who has taken the trouble to observe or participate in the world.
One might add that these were also the standard assumptions of the founders of classical liberalism -- the conceptions that those who you are arguing with are supposed to revere: von Humboldt, for example, who took it to be obvious that people are born to "inquire and create," and it is an infringement on their fundamental nature to deprive them of this right -- and further, that if an artisan produces a beautiful object on command, we may admire what he does but despise what he is, because he is not a free creative person acting from inner creative need, but a tool of production controlled externally.
Let's...keep to Adam Smith, a very important figure. He was pre-capitalist in his conceptions, and often quite interesting. For example, his basic argument for his rather nuanced views about markets:
that under conditions of liberty they would lead to equality, an obvious desideratum. Or his one use of the term "invisible hand" in "Wealth of Nations," in an argument for what economic historians call "home bias," in effect an argument against what is now called "neoliberalism" or "neoclassical economics." Smith argued that the English economy, what he cared about, would be wrecked if British capitalists were to invest abroad and import from abroad, but it would not be a problem, because "home bias" would lead them to invest at home and use domestically-produced goods, and therefore, by an "invisible hand," Britain would be saved from the ravages of international markets. Or his argument against division of labor, and insistence that in any civilized society, governments would intervene to constrain it, because it would turn working people into creatures as stupid and ignorant as a human creature can be -- essentially on von Humboldt's assumptions.
Yes, Smith is very much worth reading, whether one agrees with his interesting work or not. Reading, not worshipping on the basis of concocted mythology.