Well really the system which operates in The Shire under Saruman is anything but Socialism; the only real parallel to Socialism is the centrist control of The Shire.
How does The Shire begin to fall? With the hand of 'venture capitalism', as exercised by Lotho's family, buying up supplies and property to artificially inflate demand and thus prices - it's a common business practice, legal but greedy. You can see a similar thing today when people started buying up property in order to sell at a later date for profit - the result is that they have lots of money and capital but a lot of other people are now priced out of the housing market.
The Shire became destabilised by the Sackville-Bagginses efforts (as it would in the real world which is why we have anti-monopoly regulations) and of course his not-so benevolent 'business partner' Saruman steps in.
We also have to bear in mind the time period in which Tolkien wrote Lord of the Rings. Rationing was in force in Britain from 1940 to 1954, and it actually got worse and more punitive after 1945, at the point it just so happens that the Labour party took power, as the country's resources were half-decimated by the war and we were faced with paying back an immense debt to the US - a debt so big we only finished paying it back a couple of
weeks ago. Each person would be issued a booklet with coupons of their food allowance for a week and shops would be allocated supplies from central resources (so there's your 'gathering and sharing' in a nutshell); shoppers had to visit their 'registered' shop.
To get a flavour (no pun intended) of that you would be allowed one egg a week and an ounce of cheese - enough to make one sandwich. My father says he went from the age of 7 to the age of 20 without
any chocolate, and my mother fared worse as she was punished for crying when made to eat horse meat, which was after that a regular feature on their table. Tobacco was sent to the troops and at one point was in such scarce supply at home that shopkeepers refused to sell it to women. Tolkien turned his own garden over to vegetables and I believe they eventually got rid of Edith's aviary. He got rid of his car due to petrol shortages.
It had a deep impact on everyone at that time (I have no doubt that my grandmother's food hoarding habit stemmed from years under rationing) and Tolkien won't have been exempt, in fact it may have hit his family even harder being in an urban area. As it got worse at the same time that Attlee took power in 1945 a lot of people 'blamed' the government for something outside its control (what's new?) - and it just so happens that this was also a socialist government.
I've no doubt in my mind that the 'gathering and sharing' was influenced by the privations of rationing, with The Shire suffering by the 'powers that be' instead stockpiling food for economic reasons. There's another comparison here with the infamous 1980s European Union (a truly frightening multi-state 'machine') food mountains, where food was stockpiled to keep prices artificially high (until states complained and when you went down to sign on at the dole office you'd get free cans of 'mystery meat' - that tasted quite good, actually
). Another good comparison might be made with the Irish Great Famine. Here land owned by the lords was given over to growing grain for export with the tenants pushed onto small unproductive land that could only grow potatoes; when blight hit their spuds they had nothing to eat - literally, as the landlords refused to give up their cash crops to feed them.
There's also the consideration that the only Socialism which Tolkien lived under was benevolent and nothing remotely like anything seen in the USSR, in fact it benefited him as he was finally able to get free health care for his and Edth's long term health problems (he often struggled to pay his doctors' bills before the war). So the 'reality' to Tolkien was very different; the only unfortunate fact is that this government was active when rationing had to be deepened (due to the economic reasons I mentioned earlier), and is one of the reasons why they did not stay in power after 1951. There was also still a necessarily huge state machine following the war, something which a lot of people did not like - and they still don't but they are always quick enough to complain if they don't get their child benefits on time or have to queue for more than 20 seconds in the tax office. Putting Tolkien's thoughts into perspective - its a common British thing to 'blame the Government' for just about everything, no matter who is in power. I think it was really the extremes of theoretical Socialism and all modes of excessive state control that he hated. Not really anything unusual for a Brit, I grumble about that too (ruddy nanny state...chunner...chunner). I happen to agree with him that some nice, gentle form of anarchy would be better, like they have in The Shire but alas I'm also a realist and know that everyone is far too concerned with getting home to watch Eastenders than to spend 30 minutes of their day helping out with community essentials like emptying bins.
And if you're still reading after that ramble then you deserve a medal.
