From a microeconomic perspective, the specialization of labor undoubtedly allows us to maximize production, yet from a macroeconomic perspective, I think you're right.
I know Marx is beyond dated, and that it's only permitted to speak of him using hushed tones in serious conversation, however, in Das Kapital one of his fundamental arguments was that the long-run problem Capitalism is destined to face and ultimately lose to will be the problem of over-production. Which sounds counter-intuitive, as how could over-production possibly be bad? His argument is interesting and worth studying for itself, even if it is mostly outdated.
Real demand is still present, but the lack of liquidity in a general glut artificially depresses demand. Fed chairman Ben Bernanke explains:
but the story that captivated Bernanke involved a town full of shoe factories that closed during the Depression, leaving the community so poor that its children went barefoot. "I kept asking, Why didn't they just open the factories and make the kids shoes?
The reason is because the community didn't have anything to offer the factory owners. The factory owners know that the community doesn't have money to pay for shoes, but on the other hand the community would have money if these factories paid them instead of closing the factories.
These problems would go away if anyone could own a factory and have access to the materials, which many people above have said. However, this goes against the tenets of a capitalist free market: where someone is free to own much of the resources/land/factories/IP, which sets the barrier to entry beyond what most people can pay.
I know Marx is beyond dated, and that it's only permitted to speak of him using hushed tones in serious conversation, however, in Das Kapital one of his fundamental arguments was that the long-run problem Capitalism is destined to face and ultimately lose to will be the problem of over-production. Which sounds counter-intuitive, as how could over-production possibly be bad? His argument is interesting and worth studying for itself, even if it is mostly outdated.