How does George Orwell's Animal Farm relate to collectivism?

The economic system that the animals build on the farm is a prime example of collectivism. In political and economic terms, collectivism can be defined as a system whereby the government or the people own the land and the means of production. That's what appears to happen on Manor Farm. According to Old Major's ideology of Animalism, animals must work together to create a better society. All the animals are equal—though in actual fact, some are "more equal than others"—so everything is held in common; there's no private ownership involved.
Animal Farm is a work of satire, and Orwell's treatment of collectivism is suitably satirical. He conveys the impression that, although collectivism's a fine idea in practice, in reality it's completely unworkable. The Soviet Union under Stalin is what Orwell is satirizing here.
Not all the animals on the farm work hard to build this shining new utopia. The ruling pigs are lazy and arrogant, thinking themselves better and smarter than all the other animals. They lord it over the farm, living off the hard work of others. And in any case, the pigs don't even believe in the values of collectivism; they see it as nothing more than an instrument of control. It comes as no surprise when, at the very end of the book, they develop an understanding with neighboring farmers and it becomes impossible to distinguish pigs from humans.