The free market (which I think people also include in capitalism) would correctly predict labour intensive jobs would be outsourced. This is very much a feature (comparative advantage), not a bug. I realized a lot of supposedly free market people don't even know the basics of it. Politically the free market has become an identity associated with national greatness and a sense of control of ones destiny. The dominant feeling seems to be if you have a free market, you will win everything (which is actually opposite from the truth).