http://fee.org/freeman/why-socialism-failed/
This is a great article for anyone who hasn't read it already. It tells why socialism doesn't work and capitalism does.

To summarize, this article has three main points: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights.

Capitalism is based on the theory that incentives matter. Socialism is based on the theory that incentives don’t matter.

Forgive me, for I will be doing a lot of copy/pasting. Mostly just of the most important points.

Prices
Let's start with what it says about prices determined by market force in a capitalist society. It uses an example of how oil prices can help the public understand the scarcity of the resource based on how much it costs. The information transmitted by higher oil prices provided the appropriate incentive structure to both buyers and sellers. Buyers increased their effort to conserve a now more precious resource and sellers increased their effort to find more of this now scarcer resource.
The only alternative to a market price is a controlled or fixed price which always transmits misleading information about relative scarcity. Inappropriate behavior results from a controlled price because false information has been transmitted by an artificial, non-market price. Market prices are the only way to transmit information that will create the incentives to ensure economic efficiency.

Profits and Losses
Socialism also collapsed because of its failure to operate under a competitive, profit-and-loss system of accounting. Under central planning, there is no profit-and-loss system of accounting to accurately measure the success or failure of various programs.
Capitalism rewards success and penalizes failure. By rewarding success and penalizing failure, the profit system provides a strong disciplinary mechanism which continually redirects resources away from weak, failing, and inefficient firms toward those firms which are the most efficient and successful at serving the public. A competitive profit system ensures a constant reoptimization of resources and moves the economy toward greater levels of efficiency. Unsuccessful firms cannot escape the strong discipline of the marketplace under a profit/loss system. Competition forces companies to serve the public interest or suffer the consequences.

Private Property Rights
A third fatal defect of socialism is its blatant disregard for the role of private property rights in creating incentives that foster economic growth and development. The failure of socialism around the world is a “tragedy of commons” on a global scale.
The “tragedy of the commons” refers to the British experience of the sixteenth century when certain grazing lands were communally owned by villages and were made available for public use. The land was quickly overgrazed and eventually became worthless as villagers exploited the communally owned resource. If everyone owns the same property, then people act as if nobody owns it. When this happens, people stop tending to the property. Public ownership encourages neglect and mismanagement.
Since socialism, by definition, is a system marked by the “common ownership of the means of production,” the failure of socialism is a “tragedy of the commons” on a national scale. Much of the economic stagnation of socialism can be traced to the failure to establish and promote private property rights.

TL;DR - Capitalism works, socialism does not.