this describes the current "capitalist" system we have today, where powerful individuals can lobby the state to create laws favouring them directly.
the problem is, of course, the existence of the state.
Maybe you can point us to some examples, current or historical, where human societies thrived without the existence of the state.
Certainly you cannot claim the support of Adam Smith in your assertion.
Rothbard did a lot of claiming, I'll grant you that. Sufficient evidence for such large claims? No.
choose one