In a free market everyone would be richer because there would be less economic distortion, more efficient allocation of resources and more capital accumulation. Wealth would be less concentrated and the rich could not stay rich for long unless they compete for they money. Poverty is lack of stuff, not lack of money, and therefore poverty is a question of productivity. A free market would be vastly more productive, therefore the poor would be able to afford more stuff.
Both your questions have a simple answer: competition. Which you seem to be leaving out of your equation. Capitalists compete for labor, therefore they can not “exploit” workers. If capitalists could arbitrarily set wages as a government makes laws, then they would pay workers just enough to feed themselves. But a free market is not a system where capitalists can arbitrarily do what they want, there are market forces. Sadly most people do not understand such systemic effects and only believe in effects that are directly intended.
Monopolies can’t form either, again because of competition. This is actually quite simple economics. Anti-trust laws are not designed to stop monopolies, but to make them possible.