That the rulers of the East Bloc referred to their states as "socialist" is no more significant than the fact that they also called their states "democratic"
We are not told that "democracy" has been "discredited" following the fall of the "German Democratic Republic" (the official name of the former East Germany) -- the same common sense applies to the term "Socialist" which they appropriated to themselves. [Adapted from Essay: Snapshot of an Amoral Global Economy]
"Is socialism dead? Is capitalism the wave of the future?
"The short answer is that socialism cannot be dead because it hasn't been born yet. No state has ever been organized along genuinely socialist lines. This may seem like a cop-out, a way of defending socialism by definition, by claiming that no failure could ever discredit the socialist project because it wasn't "true" socialism.
"Such a position has its dangers, but it cannot be avoided. Socialism must be defined minimaly as a society in which all the major institutions are owned and [democratically] controlled by the people, and by all the people: obviously not just capitalitsts, but also not just a party claiming to rule on behalf of the working class. And by this definition there has never been a socialist society."
Stephen R. Shalom, "Capitalism Triumphant?, Z magazine , April 1989.