high carbon steel can be used for lathe tools, as that is what they would have been used in the days before high speed steel, tungsten carbide and ceramics. the problem with high carbon steel is that you need to keep the cutting edge cool, so you can only use them with a cutting speed a fraction of the speed of todays modern cutting tools. one advantage of high carbon steel lathe tools is that they can be filed to shape and then heat treated before honing them. a typical example would be a corner radius tool, drill a hole in the blank, file some clearance and then heat treat it etc. if you do use a high carbon steel to make a lathe cutting tool, just be very weary about grinding it to shape after heat treatment as the heat generated during grinding is likley to draw its temper.