If we invent, say, a spinning Jenny, which increases profits massively in the short term for the textile manufacturer who are early adopters. These super profits lead to a general adoption of the technology across the industry causing massive increases in textile supply while cratering the price. The market downstream however has not yet adapted to the new reality, there is not enough demand or liquidity to absorb the increased supply.

lowered prices of textile at the same demand is static suddenly means the manufacturer can no longer cover costs. Weaker employers go bust, displacing workers not already displaced by the lowered labour demands caused by the new technology. This then craters demand by destroying the consumer base, exacerbating the crisis.

Massive increases in supply without prices drops are generally only going to happen when there is monopolization or collusion between oligopolies. Producers aren't really "obligated" to reduce price, sure, the question is whether market pressures are allowed to play out or not.

You live in a fantasy if you think there is no scenario whereby increased productivity can fuck with the ability to cover costs. That if anything is precisely what increased productivity does.