Capitalism was the end of such arrangements in the most developed parts of the world. Individualism helps since individual investors benefits from investing in better equipment making people more productive and thus helping living standards overall.
Social solutions to the same problem doesn't come close to being as effective at eliminating such inefficiencies. The main thing social solutions can do is provide baselines to the population such as education and healthcare as you say, but without capitalism to follow-up with targeted investments the country will remain poor even if its population is extremely educated. Social solutions are just very bad at using peoples talents well, they have a too collectivist view and don't see the individuals.
It’s possible communism had a uniquely positive influence on Russia’s transformation, but I remain skeptical considering it seems to be the only example of communism to ever to do so, the place from which Russia was coming, and the place in which it ended.