The Labor Theory of Value

I’ve been reading Iris Marion Young’s Five Faces of Oppression (Exploitation, Marginalization, Powerlessness, Cultural Imperialism, Violence). In her section on exploitation, she makes this claim:

“Every commodity's value is a function of the labor time necessary for its production.”

I get why she says this, but it also doesn't make sense in modern times. From any contemporary mainstream economics perspective, value comes from utility and scarcity. Basically, how badly people want a thing and how hard it is to get.

Young is working from the Labor Theory of Value (LTV). That’s the classical economics tradition of Adam Smith and David Ricardo, and of course our friend, Karl Marx. Our dominant framework today is the Subjective/Marginalist Theory of Value, where value emerges from supply, demand, and scarcity.

I can see why Young leans on LTV. It gives her a structural, objective way to define exploitation as surplus value transfer, not just “unequal exchange” or bad deals. If she wants to define exploitation as an economic form of oppression, she needs a theory that makes exploitation measurable and built into the system.

But the problem for me is that the LTV completely ignores scarcity and subjective utility. That makes it impossible to take as a comprehensive theory of value in 2025. It seems like a product of its era, not something that maps cleanly onto how markets actually work now.

For example, take Adam Smith. In Wealth of Nations, he writes:

"The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it… Labour was the first price, the original purchase money that was paid for all things."

Smith isn’t talking about market price at all. He’s grounding value in labor commanded or saved. It’s all about production cost, not about how much consumers desire something. It's interesting that Smith is considered the Father of Capitalism when he held ideas like that.

And that’s the conceptual wall I keep hitting. I can understand LTV on its own terms. But trying to reconcile it with our current understanding of markets, incentives, and price formation feels almost impossible. Maybe I’m just too entrenched in subjective value theory to “see” the LTV the way Young needs us to.

So, for the economists and theory-minded folks here:
How do you make sense of LTV today? Is there a way to bridge the gap between a structural, production-based concept of value and the marginalist, preference-driven one we use now? Or is LTV simply philosophically useful and economically obsolete?

Curious what y’all think.