How can I respond to this?

Maintain that there would be absolutely nothing in this world if it weren't for labor. The materials are also derived from labor, not from management. The movement of said materials are also derived from labor, not from management. Workers can easily self-manage but management has to exist separate from the workers so that the workers aren't empowered to demand a better deal.

This is something I've always wondered as well, like even if a fuckton of time and effort went into something, if no one wants it then how does that help whoever made it? Now, under capitalism this person would probably go bankrupt and that would be that, but how does this problem go into socialism?

In the case of the Soviet Union, I believe factories operated without regard for "profit" since they were owned by the state. Their only obligation was to fulfill quotas and keep accounts balanced. Theoretically, then, no surplus should have been extracted at that level.

Surplus still needs to be collected to reinvest in the economy and provide services, however. This was done largely through the turnover tax, which was something like a VAT or sales/consumption tax. Some critics accuse this of being a rather non-transparent means of extracting surplus, but keep in mind despite being a one-party state the USSR did have electoral processes which, besides those elections and votes which were vital to legitimize the socialist government (like the plebiscites in formerly German-occupied states post-WW2), have little to no evidence of being "rigged" as western critics often spuriously claim. The soviet people did have a substantial say in the making of their economy (or at least a say in *who* got a say).

Small businesses extract value from their workers the same way capitalist ones do. And, as many people who have worked in small businesses can tell you, they have the potential to be much more exploitative. It's a lot easier to get away with wage theft if you run a pizza parlor with 3 employees, for example. Enforcing regulation and protecting civil and economic rights if all employment was in firms of that size would require a massively inflated administrative bureaucracy.

So in reality, a "small business economy" would almost certainly be a worse state of affairs than the average healthy capitalist economy.

assuming a logical worker who values getting the most money for his time and labor more then anything else, he would obviously choose the boss that gives him the most efficient labor/pay ratio right? can we agree thats true?
if it is true, then that means anytime they work for someone other then themself, it would logically follow that they are making creating value (and not just total value I mean value that they get after the boss gets a cut) MORE efficiently then they could on their own otherwise they wouldnt do it
they are being provided with value, while at the same time providing value

What about the small businesses that don't exploit their workers? Should they have their economic rights to create businesses taken away just because of a few bad apples? And how would small businesses require more administrative bureaucracy? Aren't there the same amount of workers to be checked and all?

….so, a co-op?

Surplus value is only relevant in describing the laws of motion of the market system, and of capitalism. It isn't some rubric to decide how much the worker is supposed to get, nor can you argue a "should" based on feels. The point is to say "fuck the market" and ask ourselves why the hell we're making tables in the first place, not to ensure that some guy somewhere gets so much value out of his tables regardless. Supply and demand alone would fuck with any scheme to institute a kind of "labor-money", in addition to the difficulty of ascertaining the rate of exchange between different types of labor. Labor vouchers (at least in Marxism) were not the end goal, they were seen as a necessary expedient until a better system of incentives to work and better system of accounting for resources could be implemented.

In a big multi-national these days, in-house lawyers and HR can do grunt administrative work sufficiently efficiently for them to be worth having on the payroll - they will create and administer employment contracts, disputes within the staff population, so on so on. At a certain point the cost/profit of getting these things done by external parties is too large, so they take them in house. No small business is going to be able to afford have these people on the payroll. When these people are on the payroll, an employee who is being harassed at work can go to them and lodge a grievance and have it dealt with in-house, and it won't cost the company or the worker extra. If a worker in a small business does not have a HR grievance protocol, they would have to seek external remediation. This imposes costs on the worker, and as it costs the boss, who is also their employer, they could lose their job. The worker in a big MN corp is employed by the company, and will probably not be fired for being harassed by the person above them. In this instance, it is better for the company and the worker to have in-house HR and lawyers. In a small business economy, this would all have to be done out-of-house, and would be a significant inefficiency

As you said, under capitalism bankruptcy is the destiny of any capitalist who fails to sell his product. This effectively dummies out those capitalists who are too incompetent to respond to demand. The table will still retain it's value in terms of labor time, but exchange value *is* subject to supply/demand fluctuations, so a table-capitalist headed to a market filled to the brim with surplus tables will find no buyers. Exchange value is only *based* on socially average labor time, they aren't directly equivalent.

The problem of responding to demand in a planned economy is really the central issue of socialist theory, I believe. Paul Cockshott is pretty hot around here right now, and his scheme I believe is quite elegant. To put it simply, a "market" (operated by the state and supplied by publicly owned factories) exists in consumer goods. If an item is in high demand, the staff of the local consumer goods market have the authority to raise the labor-time price accordingly. These changes in price are relayed to the appropriate regional planning agency, which analyzes them in comparison to actual socially average labor time values like this:

Current market value/real labor time value

If the resulting numerical value is above one, they know to manufacture more of that good. If it is below, they manufacture less. The ultimate goal is to reach a flat "1".

Of course, this is not the only method. The Soviet Union is somewhat notorious for breadlines (which is what Cockshott tries to avoid in his theory) but in reality the planning authorities did an absolutely admirable job projecting demand, especially considering calculation often had to be done by hand or with archaic mechanical computers and limited data. The difficulties in supplying staple food products were almost invariably a result of uncontrollable phenomena like bad harvests or politicians arbitrarily adjusting prices in an appeal to populism, disregarding planning authorities or advisors (this latter reason is very often the case whenever you hear about socialist or *supposedly* socialist states like Venezuela suffering from shortages: prices MUST correspond to real labor value and the supply, even if the cost is supposedly subsidized by the state).