Racialism is the theory that there are significant differences among races.
Mises stated plainly that some races are inferior to others. Nevertheless the law of comparative advantage (referred to by Mises as "Ricardo's law of association") still enables members of different races to cooperate in mutually beneficial ways: "It may be admitted that the races differ in talent and character and that there is no hope of ever seeing those differences resolved. Still, free trade theory shows that even the more capable races derive an advantage from associating with the less capable and that social co-operation brings them the advantage of higher productivity in the total labour process." Mises believed that due to that economic law, there need not be irreconcilable conflict between the races, or enslavement of any race by another, although he also noted, "It is nonsensical to fight the racial hypothesis by negating obvious facts. It is vain to deny that up to now certain races have contributed nothing or very little to the development of civilization and can, in this sense, be called inferior."
- Mises, Ludwig von. "Racial War". Socialism. http://mises.org/books/socialism/part3_ch19.aspx#_sec5.
- Mises, Ludwig von. "The Case for Reason". Human Action. http://mises.org/humanaction/chap3sec6.asp.
- Racialism (racial categorization) on Wikipedia