This is a very interesting question, one which I believe Ludwig von Mises answered very well in his book "Economic Calculation in the Socialist Commonwealth", published in 1920, in which he argued precisely that the socialist model was economically unsustainable, and that it would lead to tremendous poverty. In his conclusion, he argued the Soviet Union would last about 50 years, increasingly becoming politically coercive and economically unbearable until the system would implode.

The book puts forward the concept that prices are not just something you pay when you buy or sell something, but are in their aggregate (i.e. the matrix of all prices in the economy) an information technology that serves to optimise the allocation of resources.

Essentially, the theory is condensed into the statement that prices are signals: every price in the market is a bit of information, a signal that tells the system how much an individual evaluates the value of a good or service in relation to all the other goods or services available to him.

Now, each bit of information is not that valuable on its own, but the aggregate of the millions of bits of information is what he called a "dispersed information system". His argument was that this aggregate information is orders of magnitude greater than the information available to a small committee of central planners.

So, according to the price-as-information theory, it is simply impossible for a small committee - like you might have in a communist regime - to have anywhere near as much information as is necessary for an economic system to allocate enough capital into the places it is needed. If prices aren't arrived at by the economy itself, i.e. the market, how does the economy know how much capital to allocate, say, to farming equipment, or space research, or automobile factories, or computing? This lack of information, wrote von Mises, was the primary reason why socialism couldn't work (he called it the Economic Calculation Problem).

The theory was further expanded upon by Hayek, who won the Nobel Memorial prize in Economics for his work on price signals and the business cycle, and whose Nobel lecture specifically talks about the pretence of knowledge.