Adam Smith was not in favour of capitalism, and in fact warned against it. He was in favour of the free market, which is not the same thing. A market is free when it's transparent and accessible for everybody. Extreme discrepancy in wealth and capital leads to powerful parties dominating and controlling the market. Smith recognized that and warned against it, recognizing the need for workers to organize, and to prevent cartels and monopolies.

Whether capitalism is distinguishable from traditional feudalism depends entirely on how you regulate it.