Adversity brings the best out of a person, and luxury may have an exactly opposite effect.
Rousseau is not alone in cautioning against the side-effects of luxury on human psyche, capacity and character. In fact, one look at the industry of mass fantasies, known as Hollywood will make you aware that a hero is always borne out of crisis and challenges. It is difficult to think of a movie wherein the main characters lived a life of luxury and abundance without any problems from the beginning to the end of the movie. The irony of human life is that it strives for wealth and luxury but is not fulfilled with wealth and luxury alone.
As civilization begins to take root, survival is the primary objective. Human values in such a civilization are geared towards ensuring survival. In a civilization which is not beyond the threat of destruction, there is very little scope for mistrust. People who do not believe and trust a person will not think twice to abandon him, and without the social support and protection of the civilization, a human being is as good as a lame duck in the vast expanse of nature. Thus the human values of truthfulness, honesty, fairness, sacrifice and compassion - the basic tenets of morality, are essential for survival of the group, and any deviation from these values is unlikely to be tolerated by the group as a whole.
Once the civilization gets established, it expands. There are more persons in the group. The security of the group is not under threat as during the initial phase. Specialization of functions gives rise to science and technology, as well as arts, with which the civilization is able to meet most of the challenges posed before it by nature.
As civilization grows further, individuals who are a part of it no more feel threatened. There are also too many people for everyone to know, and gradually, anonymity arrives. An anonymous individual in a sea of humanity is threatened not by nature but by fellow human beings, and the struggle for survival becomes a very individualistic phenomenon. In such a scenario, arts and sciences provide luxury, which becomes a status symbol - a symbol of strength and importance in the society. Individuals strive for luxury, which is valued much more than the values or morality practiced by an individual.
In a modern industrialized society, interactions between two individuals are usually in the nature of financial transactions. Once these impersonal interactions become the norm, every valuable becomes a commodity valued in the market and everything of value that cannot be traded loses its significance. In an impersonal world, projections and images matter more than the truth. A person's value is judged by the wealth he has, and the mad scramble for wealth and show-pieces overtakes the significance attached with moral principles.
Rousseau is dead right in saying that advance of civilization leads to moral decline. This moral decline is largely a result of the fact that our concept of morality remains enshrined in the values that protect the civilization as a whole, while in the advanced civilizations, there is too much of competition between individuals to allow room for concern about the group and there is too little threat perceived for the group as a whole to be actually concerned about values that may be needed to ensure its safety.
An important implication that flows from the concepts advocated by Rousseau is that morality which lies at the root of every civilisation is finally a casualty resulting from its advancement. In other words, at a particular stage, advancement of civilization takes the form of its decay which may even lead to the final destruction of the civilization. No surprise then that the rise of every civilization is followed by its fall.