That wasn't the last time that a high-labor field was automated, much to the chagrin of current and potential future workers in the field, only for the once-expensive output to become a commodity that significantly raised the quality of life for everyone. Despite the Luddites fears of an economic collapse, it always grows.
The only reason we have desk jobs is because we've automated so much that only a small portion of us have to work on things we need to survive. Most of the tech industry is really an entertainment industry that isn't at all economically necessary. As our culture shifts around the endless entertainment possibilities available, we change what entertainment we want to throw money at, and people do more of that, and less of what they used to do, with minimal impact to the rest of us.
As long as there's enough people and machines making our food and clothing and housing, we're all going to be fine.
Granted, there are plenty of efforts to stop people and machines from growing food or building housing, but that's an entirely different problem.
The problem is that art-making-as-a-job is doomed; so are, in the long run, many other 'knowledge worker' jobs, although we can't for certain tell which ones are going to be replaced fully by AI first.
So the hardest problem is not the one relative to creative activity (for pleasure, self-expression, or catharsis), but economic activity. In your words, "Capitalism doesn't work anymore". We can discuss to what point whatever replaces our previous system will still be 'capitalism', but it is apparent that - if it works - it will be very different in many of the aspects we take for granted.
My personal (and likely naive) opinion is that a large part of the political discourse will shift towards trying to define what is -necessary- vs what is -luxury-, as the rewritten order will shift to ensure that all people receive all that is "necessary" and work (whatever it looks like) will be for "luxuries". I don't like it, but I guess that this will be ultimately the question dividing "left" from "right" for a large chunk of this century.
Personally, I will continue seeking out high-quality music/art/movies/books that speak to me, and most of my friends do the same. There will always be a demand for human-created art, regardless of any plagiarism or replication by labs.
Intellectual property was always a farce. It really is as simple as that.
For what it's worth, I upvoted GP because I think it's something worth it to think about. I didn't either up or downvote P because, well, it's not adding much and is just confusing.
But some downvotes don't mean anything. They might balance out or end as upvotes eventually.