The word "capitalism" was not used by Adam Smith-- it was Karl Marx who later coined the term. "Liassez faire" economics, as the theory is still identified meant, as the French term suggests, that government should leave the economy alone.
This was a direct attack on mercantilism of the period. The essential tenants of capitalism, as developed by Smith, included:
(1) The means of production, land and capital, are privately owned. "Capital", here, means the plant and equipment used to produce goods and services.
(2) The economy is organized and coordinated through the interaction of buyers and sellers (or producers) in markets.
(3) Suppliers, the owners of land and capital as well as laborers, pursue their own self-interests in seeking maximum gain and profits from the use of their resources. Buyers of goods and services similarly spend their money to yield the greatest satisfaction.
(4) With suppliers and buyers pursuing self-interest the market is constructed in which the value (or price) of goods and services is determined through the "haggling" of seller and buyer.
(5) With a competitive market of buyers and sellers following self-interest, the economy is self-regulating and there is little role for government. The sovereign is necessary mainly to protect society from foreign attack, uphold the rights of private property, guarantee contracts, and assist, where necessary, in the building of "infrastructure", to include roads, canals, and similar "public" goods.