More than once, Mormon has described what Hugh Nibley termed the “pride cycle” among the Nephites. They obey the commandments and they therefore prosper, because the promise of the land was that they will prosper if they keep the commandments. However, prosperity leads to other temptations. In their world, it put them in contact with other peoples and cultures, and the definitions of prosperity began to be seen in the context of what other people had or did.
Other cultures modeled how to display wealth, and the Nephites seemed to follow. Other cultures displayed how to establish social hierarchies, and the Nephites followed. Mormon never condemns prosperity. He condemns things that become associated with it, such as neglecting the poor and thinking that one person might be better than another. Those were the issues that destroyed the Nephite ideal society.
Note that in verse 2 Mormon suggests how prosperity should have been defined. It is desirable, but should lead to “doing all things for the welfare and happiness of [God’s] people.” All of his people, not only those who accumulate more than others, either in wealth or because of political power.