The blacksmith would indeed own his 'means of production'. The one and only reason he would have difficulty selling it is because of rules and regulations. This was rather the whole point of the example. As rules and regulations make it more and more difficult to access the market as a seller you move further and further away from what capitalism is.

As for Marx, something doe eyed students of today often forget is that academia can and does often go extremely far astray, particularly on social issues where a dangerous hive mind frequently emerges. For instance in the early 20th century we in the US, and the academic establishment in particular, were the biggest drivers behind eugenics. We were literally the inspiration for Hitler who saw his own work as building off our 'progress.' His work ultimately being the one and only reason that eugenics in the US was scaled back and gradually became taboo.

The rise of Marxist ideology corresponded with an extremely sharp increase in the number of individuals pursuing the social sciences and liberal arts at the postgraduate level. Unfortunately these studies, in this quantity, do not really correspond to being able to contribute to society in any meaningful way. That's not to say the arts and humanities inherently do not contribute as they most certainly do. But society cannot support a billion philosophers anymore than it can support a billion neurosurgeons or plumbers. Thus enter Marxism which is little more than a fancification of striving to live as Marx did: drink and drug yourself to stupidity while writing whatever you want. Time to put food on the table? Just mooch off Engels and your brother-in-law.