It's technically true that the expression "capitalism needs" is incorrect -- even a bit empty. Writing a careful article for ajournal one would not use the term. But to object to it in a point-scoring way on an e-list is the equivalent of an English teacher ignoring the whole content of a paper to point out that one sentence has vague pronoun reference.The workings of capitalism generate huge disparities within the working class itself (leaving aside the disparity between capitalists as individuals and workers as individuals). All visible social 'facts' in _any_ social formation generate a sort of common sense explantion of those fact (analogous to the just-so stories of evolutionary biology). All class societies of the past have generated a hierarchical view of the cosmos and of human social relations as an 'echo' of that cosmic order. One had one's "place" in a visible hierarchicalorder, and neither the individual or others saw that 'place' as something the person "deserved" to occupy (whether the king's throne or serfdom was the 'place.' (This was rudely challenged in ancient Athens, and that challenge was perhaps the prime social force behind the tremendous explosion of philosophy etc as ruling-class thinkers tried to consciously work out a comprehensive theory which could account for this aberration.(See Ellen Meiksins Wood, _Peasant-Citizen and Slave: The Origins of Athenian Democracy_)
Capitalism generates equality & a cosmos of "abstract -- isolated -- individuals (workers, planets,chemicals): everyone is a citizen, and no one has a given place in a visible hierarch of places. There emerges then (not always or even usually explicitly recognized or theorized)a need to explain those disparities, that distribution of events (people or planets)which no longer relfects a hirarchical cosmic order with visible, even nameable, places. Some invisible force seems to effect that distribution. (See Carrol B. Cox, "Citizen Angels: Civil Society and the Abstrac Individuual in _Paradise Lost_, _Milton Studies_ XXIII (1988), pp. 165-96; see also Thomas Laqueur, _Making Sex_ and Stephen Jay Gould's review of Laqueur; see also Stephanie Coontz, _Public Origins of Private Life_.) The dance of the angels is (from memory) "Most regular when most irregular it seems" (which would have baffled Dante). And there emerges by the early 19th century, still not necessarily theorized fully) a common ideology (I use the word to indicate non-theorized common sense)of indivuals throguh their own activities finding/creating their own place in a social order with no visible basis. (The treatment of the Irish under Elizabeth and under Cromwell, along with the reaction Joanna tells of the Virginia planters are, I would say, part of the immediate pre-hisotyr of racism, which comes into its own only in earl 19th-c U.S., and becomes only fully developed after the Civil War and the abolition of formal slavery.
And it is not primarily an ideology of the capitalists but of the working class: perhaps the most powerful of working-class ideologies. Capitalists sometimes consciously use this ideology, and sometimes consciously fight against at least some of its implicatoins.
Let me repeat that: RACISM IS A WORKING-CLASS IDEOLOGY. It is workers (whether their pay be high or low) after all who most desperately need for their own sense of existing to have some explanation of the world about them. National chauvinism, sexism, heterosexism, etc etc etc should all be seen as working-class ideologies, generated among workers. Capitalists (not capital or capitalism but specific capitalists) often do take conscious advantage of this working-class ideology, but it is irrelevant whether ornot capitalists themselves believe the shit.
It follows that ,except in pre-revolutionary periods, on the verge of an insurrection, class struggle takes place primarily INSIDE the working class. The focus of class struggle is the liquidationof this working class ideology and its replacement by a sense of class. All talk of "class" now is either explicitly a highly abstract analysis of capitalist relations of production (Marx) _or_ an attempt to defend racism as the ideology of the working class. (Since racism at its core is the belief, explicit or implicit, that race exsits, Blacks as well as whites beome imbuted with the ideology - this Black racism sometimes, as shag points out today, becomes explicitly stated, as in the shit put out by Cosby and Oprah Winfrey.
CapitalistS may or may not 'need' racism, and the expression "capitalism needs" makes an agent of an abstraction. But where you have capitalism you will always find the process shag describes so well of raciakuzatiion. It is only common sense.
And class struggle consists not primarily of struggle of worker against capitalist but of struggle _inside_ the working class to dissolve this oppressive ideology and way of thinking. And that struggle, again, consists in fighting against the social conditions (e.g. housing segregation) which continually regenerate the ideology of racism.
Carrol