[WS:] That is a different thing. Standards of living are a function of three things: overall level of material production, total number of population, and the distribution of material production. The increase of overall level of material production - which is growth - leads to an increase in the total population and skewed distribution - so it can led to a decline in the standards of living for most of that population.
It is an undeniable fact that human population has been steadily growing since "the dinosaurs roamed the earth" ;) which means that there has been growth of the overall level of material production, without which population growth would not be possible. Of course, left-wing catonists (http://en.wikipedia.org/wiki/Catonism) like to paint an idyllic picture of pre-modern societies, - the more distant in time and space the better - and the standards of living narrative that you mentioned plays right into this myth. But let's face it - the human life in pre-historic times was short and brutal - full of dangers and food shortages punctuated by a an occasional feast. By comparison, even the poor in modern times live better than kings of the yore if life expectancy is any indicator.
This is one of the reasons why I do not think that the concept of "capitalism" and the cultural narratives built on it are analytically useful. They may have had some propagandistic value 100 years ago but they are pretty much what the bible and kindred religious texts are - a collection of old myths and fairy tales. It is much more useful to look at development in terms of the three variables that I mentioned - overall level of material production, the size of the total human population, and the distribution of the material production among the population. I think we as society are on a very solid ground as far as the overall level of material production is concerned, our only problem is the forms of that production and its distribution. So let's focus on improving of those two aspects instead succumbing to the catonist mythology of the pre-modern idyll.
-- Wojtek
"An anarchist is a neoliberal without money."