If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage. The general industry of the country, being always in proportion to the capital which employs it, will not thereby be diminished ... but only left to find out the way in which it can be employed with the greatest advantage.
In other words, the assumption that Adam Smith made was that capital within a country would be redeployed to where a comparative advantage existed. It did not assume that the total level of production in the home country (e.g. England or say the U.S.) would be diminished in favor of a foreign competitor (e.g. France or in our case China).
The fly in this ointment is that we don’t have a kumbaya world.