> You can't just say production is a better use of resources than consumption
We're not talking about resources though -- capital is "the means of production". It's not the final good which is consumed. Capital, in the case of an Iowa corn farm, is neither the corn itself nor a choice about how to distribute the corn. Capital would be the land underlying the farm, the "seed corn", the farming implements, and the funding (liquid capital, e.g. money, credit, debt) for the operation. The farm employees and owners are ostensibly human capital but are usually considered separate from "capital" in general.
One way to allocate this capital is Zimbabwe or South Africa style, which says give it to the needy. Or Venezuela style which says give it to the public (i.e. government). Again, the question of capital allocation is distinct from the question of consumption good allocation, though the answers tend to be highly correlated.
> The real question is what's the best trade-off between expanding productive capacity, and producing consumer goods?
In general, expanding productive capacity results in producing more consumer goods. Any "lag" concerns are trivial, which would be the only tradeoff here. The best thing for people lacking in consumer goods is to produce more goods by expanding productive capacity. What's the real alternative? How would you propose to allocate capital towards people in poverty?
When we get to free nanoreplicators, that will be great in terms of raising living standards for everyone, and this entirely consistent with capital theory, particularly in terms of maximizing consumer welfare. It will be hard to "make a living" as a producer in such an economy, but no one needs to "make a living" beyond pushing the button on their nanoreplicator.