Everyone should be familiar with Marx’s essential criticisms of capitalism.
In summary, while constant capital (machines, workhouses, and such) is a necessary factor for production, it produces no profit. Profit only comes from variable capital (labor). With automation, less labor and hence less value goes into each good. Increased productivity means that more use values, but those commodities are cheaper in real value*.
It’s not true that more useful goods means less labor is necessary. In the commodity economy where valorization in the highest aim, there can never be enough work. While socialized production would negate this horrible fact, capitalism always wants more labor to exploit.
Yet, the market compels continual automation to give individual capitalists an edge. This process leads to less and less value going into goods and more and more constant capital compared to variable capital. Even if the gross mass of profit grows (which is what the capitalist cares about), the relative profit from production perpetually decreases. And the problem of too much stuff calls for destruction: planned obsolescence, destruction of goods while people have needs unmet, and, of course, wars.
*with inflation, l monetary wealth increases quantitatively without real wealth increasing
Add to that, the more they extract from the worker the less the worker has to expend on whotsits, hence the recent phenomenon of trending toward focusing more and more on luxury items and "premium" versions of for example games, live services, etc. The more the capitalists extract from labor, the smaller the pool of consumers becomes. It's a self defeating cycle.
They begin to essentially cannibalize their own class at this point. Just like capital accumulates and coalesces into monopolies, they all keep chasing after the few "whales" left that can afford their inflated pricing chasing ever increasing profits. The worker layoffs in the games industry the past few years I think are woefully underexamined. A product sells millions of copies, the creators get laid off to boost stock value, and the cycle repeats across all sectors of the economy.
RPS had a great article about all this recently with a broader focus on genAI a year or so ago which is worth a read (Edwin even cites Marx in the article) https://www.rockpapershotgun.com/we-need-to-reclaim-softwares-wishing-well-from-the-cruelty-of-generative-ai