According to the Labor Theory of Value, a good is worth as much as the labor put into it. We might then go further and assume that the labor put into it was as valuable as the goods used to fuel that labor (and so on and so on). How then can a theory of exploitation be maintained? Since laborers by definition receive the worth of their labor as subsistence wages?
The whole point of the (specific) Labor Theory of Value that you apparently refer to, is that, what Labor "injects" as value into goods produced, is more than what Labor needs to consume in order to survive. This is a fundamental assumption/argument, in order to answer the question "how profits come about?".
Then, since the theory argues that profits spring solely from Labor, it follows that they should not be appropriated by the holders of capital (the holders of capital should only get the value of capital etc that goes into the goods produced, a value that does not "inject more" than what it already is). Simply put, after paying third parties for purchases etc out of Sales, and calculating depreciation (which is what the holders of capital should receive), the rest, that would appear as profits, should be distributed to the workers (because it is the workers that created this surplus, not the capital) and not retained by the capital holders. But because they are not thus distributed, the theory of exploitation emerges.
Even more simply, I need to eat one Kgr of bread to produce two Kgr of bread, in which production other goods, equipment etc have participated, whose value amounts to only half-Kgr of bread. I take as wage the one Kgr of bread, and all other factors of production take their half-Kgr of bread. Another half-Kgr of bread remains. It is taken by the owner of the bread business as "profits". It should be given to me, because it materialized solely because of the participation of my labor in the production process -or so the theory argues.
Therefore the phrase in the question
"We might then go further and assume that the labor put into it was as valuable as the goods used to fuel that labor (and so on and so on)"
negates the fundamental premise of this theory, and leads to some other theory, one apparently incorporating a general principle of "preservation of value" (which by the way, is what the Accounting discipline is based on).