There's a productive capacity of the economy, and there's allocation. Currently we allocate a large portion of the economy to dog bowls shaped like toilets that flush when your dog eats out of it, billy bass singing wall tchotchkies, etc. We need a functional economy to produce a lot of the things you mention, but we can absolutely afford to shift resources away from plastic capitalist garbage.

I've known enough permies that have made it work to know that it's possible to have an off grid lifestyle that's quite decent if you value time and relaxation over material abundance. You talk about regression, but what about the regression of people working 3 jobs, 60 hours a week in shit jobs and barely clearing every month? Those same people could have a hay bale house, composting toilet, a permaculture garden and work 15 hours a week to pay for internet/food you can't grow/farming inputs (limited in permaculture setups).