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Having produced everything people want should be the goal.In socialism, if that thing existed, maybe.
In capitalism you don't produce what "people want".
You produce what you can SELL.
When you cannot sell what you have produced (e.g because people cannot afford to buy it anymore), and you have tons of investments in factories, production capacity and materials being underutilized, you have "overproduction".
http://en.wikipedia.org/wiki/Overproduction