No it doesn't. Capital becomes obsolescent, labor does not.
>What happens when we develop technology which can do 99% of what a human can do better, faster, and cheaper?
During 99% of recorded history, agricultural labor was the prevailing definition of "what a human can do".
I'm not talking about the prevailing definition of what a human can do. I'm talking about the actual fact of what a human can do.
You still haven't addressed the question of what will happen when nearly everything which a human being is capable of can be done better by a machine.
This holds even for the scenario of AI becoming a very close substitute for humans. The economic pressure, however, is to develop AI in directions that are complementary to human abilities.