In the great scheme of things steel is relatively soft. So is jadeite.
Remember, these were Stone Age people: they knew their rocks. They understood that one type of stone will abrade another type. For general reference to stone hardness the scale developed by Friedrich Mohs is helpful: Mohs Hardness Scale
Jadeite falls approximately into the range of quartz: 6.5 to 7. Jadeite differs from other stones in one major respect: because of its fibrous interlocking crystalline structure it's very tough. Glass is pretty hard but it shatters easily; it's not tough. Jadeite doesn't shatter without great effort and that's why, along with is color range, it and its "sister jade" mineral nephrite, have been revered by several cultures for making axes, hammers and ceremonial objects.
Exact Olmec carving methods remain unknown but emery, which has the hardness of corundum (next to diamond) is found widely in Mesoamerica. With lots of time and labor (which the Olmec had in abundance) it will abrade most other stones. Larger angular pieces of emery sand would be used for initial stock removal while smaller and smaller emery powders would remove cutting scratches and transition to polish. It could also be used as an abrasive for hand-drilling and other purposes.
I used to calibrate Rockwell Hardness Meters..................
Similar to this one. I used standards certified by the NBS (Now NIST) for testing it.