A commodity takes a certain amount of time to produce. This amount of labour time has an equivalent in the form of the commodity that acts as money, historically gold. So with gold acting as money the market price, if sold at it’s value equivalent will be a weight of gold equivalent to the amount of labour time that went into its production. This is the simplifying assumption Marx makes in Volume I of Capital.
Now of course commodities in different industries have different turnover times & different labour-capital intensities; hence Marx’s ‘prices of production’ in Volume III. Still with the simplifying assumption that aggregate prices of production equate with aggregate values, i.e. if prices were set individually at their values.
With supply & demand fluctuations market prices do not even equate with prices of production, unless by accident. But even here we can still say aggregate market prices will equate with their value equivalents.
The change comes with credit. The credits system allows people & organisations to buy now & pay later. The credit system permits leverage. It is this leverage that permits prices to inflate above their value equivalents. The scale of this is difficult to measure in practice as we need to use a commodity with a know labour time that is unaffected by such leverage. The closest we have is the historical money commodity gold. So in theory we could add up all the labour time in all commodities & calculate a ‘gold price’ & compare that to the aggregate of market prices to measure the level of ‘overproduction’. Very hard to do, but the basic concept still stands of market prices being inflated above their value equivalents due to the leverage. The job of the crisis is to bring them back into line, i.e. reducing exchange-values (market prices), but that doesn’t reduce the actual labour times that have gone into those commodities.
Under the gold standard recessions saw prices reduce back to their values as prices were effectively gold prices & gold takes a set amount of labour time to produce. But under fiat money we see currencies reducing in value (the price of gold increasing), so that in the 1970’s commodity prices in gold terms reduced (& wages even more so), whilst in currency terms they increased significantly.
We may well be seeing the start of another period of stagflation. Perhaps much more severe that the 1970’s in terms of either falling output &/or rising currency prices. But still the law of value will be acting to bring market prices back in line with their value equivalent.