> If the marginal cost of producing additional units is basically zero, which is what the hypothetical implies, then the products should be basically free
I don't think this is implied unless all productive work across all industries is automated. Practically speaking, this would happen over time, meaning that a fully automated company today could significantly reduce its costs, but would still have to purchase goods and services from upstream providers and pay to market and distribute their products.
And since companies essentially operate on greed, the leadership of these companies would carve out space for themselves, and the short term goal would almost certainly still be to maximize profit, meaning goods are not free, even if the marginal cost is low (gotta pay for all of that automation R&D after all).
Somewhere there is a tipping point where enough automation would throw the system into chaos without major changes. If it could be achieved overnight, then hypothetically we could all have free stuff.
Perhaps not, but I'm not sure it would be for the reason you are implying.
What is this hypothetical company that automates every function and has no employess anywhere producing? And what price can that thing fetch in the market? If the marginal cost of producing additional units is basically zero, which is what the hypothetical implies, then the products should be basically free, since standard microeconomics says that price = marginal cost. Which means nobody would need jobs to afford these products. Which means this condition would be sustainable in the hypothetical as you state it: sure, there would be no employees, but there would also be no need for the jobs that no longer exist.
Of course in the real world there are plenty of ways this could go sideways, but they all basically boil down to: in the real world, governments mess with markets in ways that prevent price from being driven down to marginal cost. That means many things (food, for example) cost more than they should, which means people need more income than they should need if the market were truly free. So what is really not sustainable is governments trying to mess with markets. If that stopped, we could make the necessities of life basically free. That would be a good use of technology.