I think it can work on a very small scale, let's say a few hundred people. Once a population gets large enough that you aren't familiar with the majority of your "comrades" and where the administration is able to make furtive movements to benefit themselves, that's where corruption starts.

Capitalism "works" on a much larger scale, but over time the wealthy corrupt and influence regulatory bodies to the point where the system keeps poor people poor and concentrates wealth upward.

These systems both fail because they rely on human administration, and humans are by nature selfish and greedy.