On a first glance, it might seem that The Time Machine operates at least partly on racist assumptions in the depiction of the futuristic beings, the Eloi and the Morlocks. The Eloi, pretty, graceful and golden-haired, might be taken as representative of some idealised Aryan race, and they certainly appeal more to the Time Traveller than do the savage, dark, cannibalistic Morlocks who literally prey on them. In terms of simple opposites, the Eloi could be regarded as the good, fair race, pitted against the evil dark-coloured Morlocks, the villains of the piece.
However, this distinction is based not on race, but on the class conditions of Wells’ own time and place, the distinction between ‘Capitalist and Labourer’, as the Time Traveller puts it. He goes on to draw a clear parallel between the underground-dwelling Morlocks and the working class of his own time:
Even now, does not an East-end worker live in such artificial conditions as practically to be cut off from the natural surface of the earth? (chapter 5)
This quote carries with it an implicit criticism of the social conditions of the time; the working class live in cramped and oppressive surroundings, cut off from ‘natural’ conditions. However the Time Traveller does not stray too far into social critique but gets on with the business of trying to outwit these savage descendants of the working class.
When considering the question of racism in the novel, we should also note that even if the Eloi and Morlocks were drawn on racist rather than social lines, they are both equally degenerate. If the Morlocks have become completely savage, the Eloi are no less animal-like in their own way; they are utterly feeble and lacking in all intelligence. The Time Traveller might feel more drawn towards them than to the vicious Morlocks but he is saddened at the wholesale decline of human civilization; and in this the privileged upper-class ancestors of the Eloi are as much to blame as the deprived forerunners of the Morlocks. In fact, they are probably more to blame, as they were the ones in position of wealth and power, the social elite who let everything go to waste.
To conclude, we can say that The Time Machine is not a racist novel. It might be possible to detect some racist overtones in the depiction of the Eloi and Morlocks, but their portrayal is grounded on notions of class difference rather than racial difference.