Lately, we've seen DnD and Pathfinder move away from some of the more blatant signifiers, like renaming "race" into "species" and "ancestry," and in the case of Pathfinder, having systems in place to mix ancestries in a character build. DnD has decoupled good and evil from species, and pathfinder has done away with good and evil entirely ( keeping a vestige of it present for things like demons and angels).
Race is almost alwys tied to a language and a culture, with, say, kobolds having the same certain cultural signifiers all over the world. To an extent, this makes semse because different peoples in these games can have different physical abilities, or have different origins entirely, which would naturally lead to them developing along different lines -- If one people can breathe underwater and another was born from a volcano by a specific god's decree, that would inform how these cultures behave.
Is it possible to have a fantasy along these lines with a materialist underpinning, or is this very idea of inborn powers anathema to that sort of approach?
This sounds very libertarian but isn't.
They live in a world where a sufficiently powerful mage can mind control an entire continent without actually being conscious of the fact they're doing it. Or if they are being able to stop.
When they finally got free, the former slaves vowed they'd never compel anyone ever again. In practice they still have a state and judges and punishments, but most punishments are fines.
Additionally, none of the mage autocracies around them know how their secret socialist cumbstomp magic works so once you join, you can't leave, ever.
Their whole civilisation is held together by a massive social hive mind geas that requires voluntary committment to it's rules (which is both a good countermeasure against subversion by outside mages and also prevents them going all War of the First Coalition.)
If you're a sufficiently powerful mage, you need to bind your soul to it and physically show the geas that you can live in society all the time, or it will delete you (or at least part of you). A main character sacrifices themself to defend the republic at one point because of this.
They do keep one person in prison. A mad mage they can't kill. This is considered to be a massive civilisational failure.