Socialism taken to extreme would be communism. I believe communism works up to about 100 people. After that, the slackers become anonymous and motivation to be productive is lost. But under 100 people, people can see the effect of their individual efforts. People who contribute more than others are rewarded socially. People who don't contribute are shunned socially.
I've seen how this works when I lived in the Arctic. Traditional Inuit society based on "Ningiqtuq," or sharing is a form of communism. Not only does it work, it was probably the only way the Inuit could survive in such a harsh environment.
Another example would be Hutterite colonies.
Hutterite - Wikipedia, the free encyclopedia
Effectively they are a form of communism. Everything is owned by the colony or communally. When the colony gets too big, it splits off a daughter colony. Hutterite colonies are an example of how small scale communism leads to economic success. It has other problems, related to liberty and individual freedom, but poverty isn't a problem.
The fall of the USSR and most communist systems proves this style of government has serious problems when the number of people involved is too big. The slackers do as well as the contributers and the motivation to contribute is lost. Central planning and lack of a free market leads to poor decision making and inefficiency. Eventually this system collapses economically.
Extreme capitalism also doesn't work. The class structure becomes fixed and the difference between the classes become extreme. At the top are wealthy people who contribute little or nothing. At the bottom, the poor struggle for basic survival. Eventually this system colllapses in revolution and civil war.
Moderate socialism is a balance between the extremes. It has the free market benefits of capitalism and social benefits of communalism. A class structure exists. The poor aren't in survival mode and can work to improve themselves. The wealthy have an extravagant lifestyle. (After the first billion or so, what's the point? Name one thing you can't do for lack of wealth?) People are still motivated by ambition and a desire for a better life.
The government for the most part regulates the free market economy for longterm growth and stability, interfering as little as possible. Everyone's basic needs (food, clothing, shelter, education, healthcare) are met communally. Want a higher standard of living than the absolute minimum? Get a job... The more you earn, the more taxes you pay in order to help the poor rise out of poverty.
That's how I see socialism and why I consider myself a socialist.