It does not, because productivity can increase. You have a very common misunderstanding

Doesn’t work if all of the productivity gains are captured by the wealthy owners of most of the capital though.

If more of society’s desires can be delivered with fewer people at lower cost, all of society benefits

Not necessarily. For example, if most of society's wealth is concentrated with a few people, and the rest can get crumbs from that table only by serving the wealthy, then a situation where something is delivered with fewer people at lower cost translates to more people starving because they are no longer economically useful.

It doesn’t matter if 1 guy has 99.99% of all wealth on earth if everyone’s living standard is high and they can afford all of life’s wants

That is not, however, what is happening. The Western world is facing a crisis where young people seem to be barely be able to find a place to live and have trouble finding a job, and are constantly being told that entry-level jobs for them will be replaced by automation or AI.

Little is being done to give them assurances they will be able to provide for themselves.

What we are currently experience is less of society's desires being delivered.