Ok, let's make some things straight first:

• when I say "innovation", I mean new ideas. To have more people who have more new ideas, we need to bring them up by supporting them and empowering them to explore, not by trying to contain them in some kind of framework (which means I am also against bullshit like "we fucking need communism, or else everything is fucked", but this detour would have taken a separate paragraph)

• when you talk about investment, infrastructure and such, you mean building something. That is application, and capitalism has to do fuck nothing with how effectively this goes.

Now, using extra bandwidth given by technology to build more technology - what kind of closed circle that is?

This actually leads to a better quality of life for everyone

It does not. Right now I am more comfortable than many kings in the past, but I am not happier. Apart from this, there has been any number of miserable kings. Comfort is not a good life

And all those people working on innovation aren’t’slaves

Ha. Flash news: people who do the hard work of coming up with something new, building prototypes and figuring out how to scale all that are often forced to do that, means include blackmail and any kind of dirt move there is

But they wouldn’t put in all that effort if it wasn’t a job that they needed to do to support themselves

Nu-uh. In case you didn't know, some people are so passionate about something they don't care if they die tomorrow or whether they smell awful. Effort they put in some field - extraordinary still. In case you didn't know again, what one has to do to survive and what they actually enjoy and are good at are often very different things and even spheres of life

Edit, addition:

I really don’t see how we can effectively run a society where people don’t have to work, where people just do what they want

We can start at really good social programs (the kind where society reaches for you when you need help, not tries to punish you when you have already gone crazy aggressive and where bad faith actors are sought for and dealt with accordingly), and yes, I did not say "all should just do what they want". To make the latter part work, "what they want" should be alligned with "what is needed for everyone", which takes a certain and high enough level of maturity. Humanity can get there, but there are steps to be taken first, like good education, universal housing and nourishment, then add universal physical development, then add universal entertainment (of course, crafted to make everyone involved more balanced). And all along this road, whatever I can afford to give someone who can plan these things and make them work, I am willing to give. Not because I will survive better myself ("afford" means my survival is taken care of), but because someone will benefit from that