Little incentive to expand or contract production in response to demand shifts. Superior performance by private sector is embarrassing. Existence of private sector alternatives makes high pricing difficult. The larger the government-owned sector becomes, the fewer alternative suppliers consumers have. The larger the government-owned sector becomes, the fewer alternative employers workers have.
Socialism operates far beyond the minimum efficient scale.
Enterprises are simply too big - as should be expected, because markets already take advantage of economies of scale. Prices for almost all goods set too low, and accompanied by permanent rationing and line-waiting. Socialist systems can and do offer material rewards. But they are usually rewards for loyal service to the Party, not for production. Producers have little or no incentive to produce at low cost or to serve consumers.