If the political prediction markets are right, we are going to end up with a presidential contest between two people who agree on the pressing need to expand the entire welfare-warfare state. They can argue about priorities, but they agree on the overall goal. With the campaign lacking serious issues, something tells me that the great American obsession over race is going to play a major role, which is gravely unfortunate since the discussion is unlikely to be enlightening.

Of course it's all politics, that is, equal parts dissembling and illusion, and designed to confer on some groups more power over other groups.

But it does raise important questions: what is racism and how can we tell if it exists? I'm not talking about someone who dislikes African-Americans or whites or Latinos. We might call that racism on the level of individual ethics, but there are no inevitable and widespread social consequences of a bad attitude. Defining racism, a notion highly charged with political implications, also raises the specter of the Thought Police: did you or did you not think politically incorrect thoughts?

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Let's deepen and broaden the discussion in light of what Ludwig von Mises says about racism in contrast to the liberal view of the social order. In Omnipotent Government, he shows that the modern doctrine of racism originated with the Frenchman Joseph Arthur Comte de Gobineau as a way to justify aristocratic privilege. In the hands of the Nazis, the doctrine was extended to the alleged superiority of Aryans as versus everyone else. They claimed that the races were inherently incompatible, and advocated state policies to bring about their desired outcome.

Mises first regards racism as a particular species of a general social theory that posits the existence of intractable conflicts in society, and that therefore it is impossible for society to work properly absent some fundamental structural change brought about by the state. In the old Marxist variety, this conflict was between capital and labor. That view doesn't have many adherents anymore since real-world events have disproved the Marxian vision for more than a century. The poor didn't get poorer under capitalism; they became richer than ever before in human history.

In a similar way, the racialists must also confront the reality of the market economy. As Mises said, in a market economy, there is no legal discrimination against anyone. Freedom prevails, and "whoever dislikes the Jews may in such a world avoid patronizing Jewish shopkeepers, doctors, and lawyers." The problem is that this does not produce the results racists want. Indeed, the market always tends to bring people together in peace, neither compelling nor forbidding exchanges.

"Many decades of intensive anti-Semitic propaganda did not succeed in preventing German 'Aryans' from buying in shops owned by Jews, from consulting Jewish doctors and lawyers, and from reading books by Jewish authors." What the racists wanted required more. "Whoever wanted to get rid of his Jewish competitors could not rely on an alleged hatred of Jews; he was under the necessity of asking for legal discrimination against them."

The end result, then, is a policy of interventionism. This interventionism is required if a racist result is to be brought about, and the allegedly intractable conflict finally resolved. If this logic is carried to its end point, the result is mass suffering and death. The Jews were the problem in Germany, so they had to be eradicated. The Kulaks in Russia similarly had to be destroyed. Same with the anyone with Western or bourgeois attachments in Mao's China or Pol Pot's Cambodia. The Hegelian synthesis in each of these cases is achieved through mass slaughter. The supposedly persistent conflict between groups is washed away in rivers of blood.

Even as Marxists abandoned their old view of capital-labor relations, they promoted the conflict view of society – one entirely at odds with the old liberal idea – in other forms. This is because the Marxian view itself has deeper roots in Hegel's view that history must tend toward a synthesis of two opposing forces, culminating in some transforming moment. Socialism is one way to render the Hegelian view in material terms. But there are other ways. So long as you have the perception of a war-to-the-knife conflict, history cries out for a resolution.

Thus does the Marxian view easily mutate to take on a different caste depending on the political moment. The sexist view of the world, for example, holds that men and women have opposing interests, and that a gain by one sex always comes at the expense of the other. A forced rearrangement of social institutions, they believed, was required to fix the problem.

Now, keep in mind that this view of society is not necessarily held by one group or another. We think of anti-male women's activists who believe that women can only advance through political action, but the view can also be held by men. The misogynist male might also believe that women are the key problem with the world, and so social structures need to be forcibly rearranged to favor men.

The conflict view is a part of the environmentalist agenda too. The notion that humans cannot advance without killing nature is widely held today. People look at China's advancing economy and their first thought is not human flourishing, but environmental catastrophe. Think too of those who accept as an article of faith that changes in weather patterns are due to us humans living it up too much.

We see this further today in the area of religion. Some people are dead set on the idea that a free society is incompatible with a multiplicity of religious faiths. This view is particularly popular among Christian fundamentalists, who claim that Islam will never be satisfied until it wipes out Christianity, and that every new mosque is a mortal threat to Christendom. They can't imagine that people can co-exist in peace, tolerance, and trade, leaving religion to personal conscience.

So too with race. Decades after Gobineau, in the 1930s, it became the intellectual fashion to believe that state eugenics was necessary to cull the population of its inferior elements, so that the superior elements could thrive. Behind this was an elaborate argument about human evolution and the need for planned reproduction. This view was widely held on the left and the right, in highbrow and lowbrow circles. Why was state planning necessary? Because, it was believed, there was a genetic competition that pitted all racial groups against all, and only one group could win.

Thus did the racialist view sample Marxism, changing the posited conflict from capital and labor to the races. What they failed to understand, or understood but hated, was the capacity for voluntary institutions to harmonize racial interests. The United States showed this to be true. After the ghastly civil war came the blessed abolition of slavery, and then the end of laws requiring racial segregation. We saw how the free market can bring about cooperative trading relationships among all people. (Of course, the laws hindering freedom of association and contract in the name of antiracism retarded social cooperation.)

What freedom has illustrated is that differences among people do not need to lead to intractable conflicts. More and more social cooperation is possible and fruitful, to the extent that people are granted the freedom to associate, trade, make contracts, and work together toward their mutual advantage.

Sadly, however, among many people in this country, there is still the impression that state-mandated institutional change, even revolution, is required to end intractable conflicts. They believe that the very essence of the social structure captures this racial conflict. Some blacks hold this view, some whites hold this view, some Latinos hold this view – the ideology of racism does not elude any group.

It should be no surprise, then, that Mises's ideas have drawn fire from white racialists who insist that by talking about markets and freedom, we are evading the real issue, which is who will dominate. And there is the view that prosperity is not really about the question of freedom, but about the purity of the genetic stocks. Such views are not limited to whites; black activists too speak as if the only issue that really matters is gaining legal preferences for their group. In either case, the agenda is all about who has power over whom, rather than ending the ability of any group to have power over any other group.

The state is not a neutral observer. It will pass environmental legislation. It will regulate relations between races and sexes. It will put down this religion in order to raise that one up. In each case, the intervention only exacerbates conflicts, which in turn creates the impression that there really is an intractable conflict at work. For example, if the state taxes one group to give to another group, it fuels conflict and gives the impression that legislation is the route to liberation.

But who is the real winner in this game? The state and the state alone. By purporting to be the great social referee, it accumulates more power unto itself and leaves everyone else with less freedom to work out their own problems. And here is the real problem with racism or any -ism that fails to understand the capacity of the free society to work out its own problems through exchange and mutual benefit.

Thus can we see that racism is not a unique problem in society but part of a larger misconception about the basis of social cooperation.

Of course, it is essential to retain the old liberal view even in the midst of all the coming conflicts, both in rhetoric and in policy. Always and everywhere, the only serious political issue is what the state should and should not do. All the rest distracts.