This contrasts with a free market economy.
Socialist (or communist) economies are generally command economies, and they have been shown to fail. This failure occurs for several reasons.
Effectively a command economy is equivalent to having one large company. Ironically communism is the embodiment of the average leftist's nightmare - one large corporation running everything.
Large organizations suffer from diseconomies of scale. High levels of corruption will exist, and be especially high if those in control of the company are undemocratic and therefore answerable only to themselves. However even if total honesty prevails, an economy is too hard for anyone to actually understand. Each person may understand part of it, but no-one can understand all of it.
One of the major strengths of the free market model is that each person only needs to know how their little part of it works. It self organizes, and the system becomes highly efficient. The local bar manager may know how to hire security, where to buy beer, and how to deal with the government licensing, but that is all. The beer producer may know how to buy hops, how to ferment them into beer, and how to sell it to local bar managers, but that is all. A command economy involves one central source making all decision about quantity and cost which simply cannot be known by one authority.
Even in a free market economy there will be large organizations, who will struggle with the trade-offs between economies of scale and diseconomies of scale, but these will be sorted out by the market. Those who get the balance wrong will be replaced by those who get it right.
Of course those who understand the system better will tend to do better than those who don't. But it's better than dragging everyone down to to common denominator.