Capitalist development in Europe began at the late Medieval Period (~1300's) when goods from Asia (silks, spices) began to be available after the Crusades. They were very expensive, in high demand, and consequently, trade increased, creating wealth in Italy, which was geographically ideally situated for the increased maritime trade to the East. In fact, this accumulation of wealth allowed for the richest merchant families to begin a banking system, and begin patronizing artists, which was one of the factors that brought about the Renaissance. This infusion of money (capital) began to stimulate commerce locally; to build merchant ships skilled craftsmen were in high demand, and this demand for labor caused the price of labor to rise, increasing the standard of living among laborers. To supply all the trading ships with food, farmers had to get more efficient; those that did so made more money than those that did not. This is just one example of the "ripple effect" that a Capitalist economy creates.
In response to #2 - Another tenet within The Wealth of Nations was the concept of supply and demand. Anyone supplying goods or services for a demand would make a profit. This stimulated trade, and encouraged innovation, improved the standard of living. The concept of the "Invisible Hand" of the market, or "What the market will bear" ties in with supply and demand in determining prices for goods and services, applicable today as it was back then.
Unfortunately, Africa at this time was in decline; the great civilizations that had existed were gone, civil and tribal warfare was rampant. Labor needs were great in Europe's burgeoning colonies, and the demand for labor being high, was satisfied by the supply of humans in the destroyed cultures of Africa. The slave trade, horrible as it was, does not invalidate the principles of supply and demand in particular and Capitalism in general; rather, it serves as a perverse, gruesome example of its efficacy. Where the fault lies therefore is not in the economic system, but in the poor morals of those who would choose to make money at all costs, incurring generations of suffering upon their fellow humans.