They have demonstrably not - they have generally failed until introducing capitalism-eseque cooperation. "They fail when they're mismanaged, privatized, or stripped of the social fabric that sustains them" - yes, these are obvious natural consequences of scale.

Not really. It didn't happen in syndicalized Spain. It didn't happen for millennia in ancient cities.

Scale being necessary seems to be unique to capitalism and state capitalism (Marxist industrialization requirements).

Maybe it was necessary before, I don't know but it's moot. We certainly have achieved post scarcity now and there should be no issues leveraging the tools our ancestors have given us to ensure it's distributed well.