Similar excerpt from Value, Price, and Profit (basically a cliff notes version of Capital):

Excerpt - supply and demand do not explain value

“Supply and demand regulate nothing but the temporary fluctuations of market prices. They will explain to you why the market price of a commodity rises above or sinks below its value, but they can never account for the value itself. Suppose supply and demand to equilibrate, or, as the economists call it, to cover each other. Why, the very moment these opposite forces become equal they paralyze each other, and cease to work in the one or other direction. At the moment when supply and demand equilibrate each other, and therefore cease to act, the market price of a commodity coincides with its real value, with the standard price round which its market prices oscillate. In inquiring into the nature of that VALUE, we have therefore nothing at all to do with the temporary effects on market prices of supply and demand.”

Now, this concept of an ideal price was not innovated by Marx. Adam Smith (regarded by Marx as one of the two great political economists, along with David Ricardo, in Capital chapter 1 footnote 33) thought of this as well and called it natural price.

In fact, Marx was not even the first to come up with a labor theory of value. Adam Smith, a man held in esteem today by modern bourgeois economists, actually himself based his theory on a labor theory of value.

Capital is Marx’s original ideas posed as a critique of political economy (hence the subtitle). So he took these ideas that had already been put forward by Smith, Ricardo, and others, and carried them out systematically to their conclusion, in some aspects more consistently than the original authors.

A flaw in Adam Smith’s theory of labor is the mud pie argument so often thrown at Marx, when really Marx made the theoretical advancement that overcomes it. Smith did not determine what kind of labor creates value and hence counts as social labor. So, someone who makes something socially useless, like mud pies, all day could earn an income in Smith’s model.

What distinguishes Marx’s labor theory from earlier theories is in his recognition of the dual character of labor¹, that a singular act of labor is regarded in two different ways in the real practice of capitalism. On one hand, concrete labor produces use values, but on the other hand, abstract labor produces value. Throughout capital, concrete ≈ natural/physical, and abstract ≈ social. All societies produce use values, but only in the capitalist epoch does society behave as though these use values have a distinct property called value, due to being commodities.

1 - Letter from Marx to Engels

”The best points in my book are: 1) the two-fold character of labor, according to whether it is expressed in use value or exchange value. (All understanding of the facts depends upon this.) It is emphasized immediately, in the first chapter; 2) the treatment of surplus value independently of its particular forms as profit, interest, ground rent, etc.”