I understand that it's a method that ascribes purposes to things. I have heard people speak very highly and lowly of it. On the one hand people say it has greater explanatory power than cause and effect. On the other, it assumes purpose in a meaningless universe. So which is it? Is it a good framework?
What is the psychological part of racism? Fear of strangers?
Fear of strangers is an emerging characteristic between social groups. It can be used as a tool for justifying those things you mentioned, but it wasn't always used for it, and not exclusively for it.
By itself, doesn't have a purpose. It's initially just the contrast (dialectics, if you will) between familiarity and it's absence.
Racism wasn't invented, nor it has a purpose. After it exists as a superstructure, it can be leveraged by agents as a tool, just like hands could be leveraged as tools once they become proficient enough in animals.
I think. I'm not used to think in these terms, though.