Dave Smith talks about arguing with his middle school teacher about communism working on paper but not in practice. He rightfully pointed out that if it actually did work in theory, then it would work in practice. All that statement indicates is that the theory is incorrect.

Ironically, "from each according to his ability, to each according to his needs" is actually closer to describing what free markets do than central planning. You're right that as stated it doesn't really make sense, but with some minor tweaks I think you can see my point: "ability" -> "comparative advantage" and "needs" -> "preferences" or "demand".