(FORTUNE Magazine) – The racial-preference policies lumped together under the label "affirmative action" seem to be reaching the end of their collective road. The Republican majority in Congress and most GOP presidential candidates oppose affirmative action, the courts are chipping away at some of its legal underpinnings, and in less than a year voters in California--that bellwether state--appear set to back a referendum banning laws or statutes that offer "preferential treatment" on the basis of race.

Public opinion as well, judging from various polls, has lately soured on affirmative action. Now comes FORTUNE's latest CEO poll with further confirmation. In a survey of top executives at the largest U.S. industrial and service companies, conducted exclusively for FORTUNE by the opinion research firm Clark Martire & Bartolomeo, only 52% of the nearly 200 respondents described the results of affirmative-action programs as "good" or "very good." That's down from 68% who felt that way in a similar FORTUNE poll in 1989. Over that same period, the percentage of CEOs who rated the results of affirmative action as "fair to poor" has risen from 31% to 46%. And here's the clincher: Asked whether they would back in their states a ban on racial and gender preferences similar to the one on the ballot in California, 78% of CEOs in FORTUNE's latest poll said yes.

So is it all over for affirmative action? Hardly. In fact, reports of its imminent demise aren't merely exaggerated; they're dead wrong. Yes, most mandatory racial-preference programs--requirements, for example, that state or federal contractors set aside a precise share of their subcontracts for minority-owned firms--are in deep trouble and may not survive. But even without specific quotas, businesses, advertisers, and other private institutions will continue to strive to diversify their work forces and present a more multicultural face to the outside world. Two reasons: In an ever more ethnically diverse society, that's the only approach that makes economic sense. And no less important, corporate laggards can rest assured that even after a broad repeal of many affirmative-action programs, more than enough civil rights laws will remain on the books to enable nimble legal entrepreneurs to sue successfully on behalf of just about anyone.

To understand why affirmative action, properly understood, isn't going away, it helps to be clear about what's driving the backlash against it. Rising racism, the reason often cited by defenders of the current system, is not the primary culprit. "Over the past three decades racial attitudes in the U.S. have liberalized in all kinds of dimensions," says Everett Carll Ladd, director of the Roper Center for Public Opinion Research at the University of Connecticut.

Rather, the shifting politics of preference nationwide is being driven by three forces. First are the new multipolar ethnic politics that come with the 20 million or so immigrants the U.S. has absorbed in the past quarter-century. Just as the world-power game is no longer limited to the U.S. and the U.S.S.R., so racial politics in this country are no longer defined purely by the black-white divide that affirmative action was originally devised to redress. Indeed, with intermarriage among all ethnic groups on a steep rise, the very definition of ethnicity must be reconsidered; the boxes to be checked on bureaucratic forms often distort reality more than they reveal it.

Delicious case in point: When the Justice Department last spring defended a black-only scholarship program at the University of Maryland, the successful plaintiff was a Hispanic with the surname Podberesky. Delicious case in point No. 2: One of the few California business executives bold enough to take a prominent stand in favor of the state's November 1996 referendum assailing affirmative action is Darrell Issa, 42, president and founder of Directed Electronics Inc., a private $70-million-a-year maker of car alarms. Most of Issa's employees are minorities, as are many of his customers; Issa himself is an Arab American. "Race relations will improve without quotas," he believes. "People will gain more respect for their achievements when the stigma of whether it was thanks to a quota disappears."

The Golden State itself is Exhibit A for anyone trying to show how the multicultural melting pot of America in the late 20th century has made affirmative action mathematically impossible to manage. Across the U.S., some 74% of Americans are counted as non-Hispanic whites; African Americans are second, with 13% of the population. But kaleidoscopic California is different. As the state's population has swelled 62% in the past quarter-century--twice as fast as the rest of the U.S.--non-Hispanic whites are now just 57% of the population; Hispanics are the second-largest group, at 26%, followed by Asians and Pacific Islanders at 9% and blacks at 7%. Toss in the other 146 or so nationalities living in California and include white females--whose presence or absence is typically included in tallies of whether institutions have acted affirmatively--and some 72% of Californians now count as minorities and so fall into a "protected class."

Adding to the complexity, nearly a quarter of California residents today were born outside the U.S. A case can be made that America must continue to redress the appalling injustice done to slaves and the descendants of slaves, but it's more problematic to assign historical-victim status to someone who landed at LAX yesterday.

Beyond demographics, the broad political reaction against affirmative action in recent years has been fueled by growing evidence that these policies have too often ended up laying out rigid quotas, not cast-a-wider-net goals. And when it comes to quotas, notes Roper's Ladd, "most Americans instinctively regard them as offensive."

The third, and most painful, reason affirmative-action programs have fallen into general disregard is this: They simply have not worked as promised. Substantial numbers of African Americans have joined the middle class, as measured by income, home ownership, and educational attainment. The percentage of blacks who have completed four or more years of college has more than quadrupled since 1950. But for the bottom quintiles of the black community, conditions have worsened, in spite of the Great Society fund gusher. Sociopathological indices, from dependence to illegitimacy to crime, have soared since the 1960s. Says Glenn Loury, a black professor of economics at Boston University: "It is now beyond dispute that the principal beneficiaries of affirmative action are relatively well-off African Americans."

So what comes next? In Washington, Florida Republican Charles T. Canady, chairman of the House Judiciary subcommittee on the Constitution, has introduced the Equal Opportunity Act of 1995. This bill, he says, "sets forth a clear and morally compelling principle--the federal government may not discriminate by granting a preference to any person based on their race, color, gender, or national origin." Such sentiment is not limited to Republicans. Connecticut Senator Joseph I. Lieberman, chairman of the moderate Democratic Leadership Council (DLC), has warned his fellow Democrats that they can't keep defending "policies that are based on group preferences as opposed to individual opportunities."

Don't expect much immediate change to come from Capitol Hill, however. The battle over the budget will likely shove most nonspending bills off the legislative calendar until after the November 1996 elections. Among Democrats, liberal activists wield far more clout than Lieberman's DLC, and they have drawn a pro-preference line in the sand. As perennial potential presidential candidate Jesse Jackson told his Rainbow Coalition, "We will not let the gains of the last 30 years be lost." Desperate to hold on to his dependable base of black voters, Bill Clinton can't afford to reassess his views on affirmative action--any more than Republicans can risk reassessing their reflexive pro-gun lobby policies.

Without waiting for politicians to act, however, the Supreme Court has been conducting its own review of race-conscious remedying. In the most directly relevant case for business, the so-called Adarand case, the Court last June ruled that preference programs--in this instance the contracting set-asides run by the Transportation Department--are constitutionally permissible only if they are as "narrowly tailored" as possible to redress discrimination against "persons, not groups."

In the wake of Adarand, assistant attorney general Walter Dellinger circulated a 37-page memo to general counsels across the federal government, warning them that the Court's "strict scrutiny" standard would severely crimp set-aside programs. Noting that "many existing federal affirmative-action programs are not specifically mandated by Congress," Dellinger singled out the Federal Communications Commission for its quotificatory zeal. The FCC was badly burned earlier this year when the new Republican Congress reached out and killed a deal in which Viacom, the $7.6-billion-a-year media conglomerate, was in line to receive a $600 million tax break for selling cable-TV properties to an African American businessman in "partnership" with fellow media giant Tele-Communications Inc. Wary of losing another fight over preference programs for the black elite, the FCC recently shelved a plan to offer women and minorities "bidding credits" for its auction of 493 spectrum licenses for "personal communications services," including wireless phones and pagers.

Taking a longer view--say, over the next five years--the three-way assault on affirmative action in Congress, in the courts, and at the grassroots may well lead to the dismantling of most explicit set-aside programs. On the face of it, that prospect should please Big Business. Nearly four-fifths of the chief executives polled by FORTUNE favored repealing a broad range of federal programs that extend mandatory preferences to woman- or minority-owned firms, or impose hiring quotas for a company to win federal contracts.

But CEOs shouldn't be too quick to celebrate the prospect of a post-quota future. To understand why, lend an ear to David H. Shapiro, head of a seven-person Washington, D.C., law firm that enjoys a booming practice in employment discrimination and civil rights cases. Affirmative action, Shapiro cheerily agrees, "is going the way of the dinosaur." But the last thing he's worrying about is a slump in his business.

"Suppose Congress passed the Omnibus Abolition of Affirmative Action Act of 1996," he says. And suppose a key clause read as follows: "No law, rule, or regulation shall require or allow a preference given in employment or any aspect of employment on account of race, creed, color, national origin, religion, sex, or condition of physical or mental handicap." Such a law would forbid procrustean preferences and quotas, he says, but so what?

Shapiro then patiently itemizes a slew of antidiscrimination statutes that would still remain on the books. First, there's Title VII of the 1964 Civil Rights Act, which was amended in 1991 to allow plaintiffs to sue for compensatory as well as punitive damages in cases of intentional discrimination because of race, sex, creed, color, or national origin. Second, thereÕs U.S. Civil Code Section 1981, which has its roots in the Civil Rights Act of 1866; Section 1981 suits apply only to racial discrimination, but there's no cap on damages--and no minimum size for the defending firm. "That means it extends down to mom and pop businesses," Shapiro notes. In addition, there's the Equal Pay Act of 1963, the Age Discrimination in Employment Act of 1967, and the Americans with Disabilities Act of 1990. Finally, most states--and many cities--have civil rights laws of their own, many of which provide for private rights of action.

In short, as long as Americans can sue over discrimination, Shapiro and the rest of his colleagues in the so-called Title VII bar couldn't care less about the overall landscape of preference. Passage of that hypothetical new anti-affirmative-action measure, he concludes with a happy smile, "wouldn't affect us at all."

Indeed, Shapiro reports that one of the fastest-growing parts of his practice is age discrimination. Companies are so eager to do the right thing for blacks and women, he observes, that they are trampling over the rights of white men. Shapiro recently sued the National Geographic Society on behalf of a 60-ish white male. "It was an all-black jury," he recalls, "and the plaintiff spoke with a broad Southern accent." Yet Shapiro won $450,000 in compensatory damages for his client. Exults the feisty litigator: "This is a great country!"

Business for the like of Shapiro could soon become even more brisk if anti-affirmative-action reformers have their way. The Progressive Policy Institute, a hotbed of moderate Democratic policy mongering, has come out in favor of scrapping all existing quota policies in exchange for stepping up enforcement of antidiscrimination laws. That's a quid pro quo worth pondering, agrees GOP Congressman Canady.

But if voters, lawmakers, and judges continue to sandblast numerical preference programs while leaving the existing litigation structure in place, it becomes all too easy to imagine where this seemingly unobjectionable bipartisan consensus could lead us--racing down the road into a litigation cul de sac, in which all sue all. What will surely be lost on this long, strange trip is the original and noble impulse of the civil rights laws--namely, racial justice. Recently the Small Business Administration ruled to admit a white-owned firm, O'Donnell Construction Co., to its set-aside program for minorities; an appeals panel found that in the mostly black District of Columbia, O'Donnell is "socially and economically disadvantaged."

On a cheerier note, assuming optimistically that lawyers will not be permitted to cripple job creation, the same demographic forces that are making the legal and bureaucratic administration of affirmative action impossible should continue to make the voluntary pursuit of diversity a necessity for most businesses. The economy, as always, must be fueled by new blood and new consumers--and in America both workers and customers are increasingly nonwhite. Result: Multiculturalism, as an economic and aesthetic value, seems to be permanently embedded in U.S. corporate culture. Says Robert M. Teeter, a Republican pollster who sits on the board of the United Parcel Service: "Diversity isn't a slogan--it's a reality when you're hiring people everywhere." As far as UPS's 315,000 employees are concerned, he adds, "you could abolish affirmative action tomorrow, and not much would change." The CEOs in FORTUNE's poll agree: 96% insist that their companies would not change their affirmative-action efforts even if all federal enforcement was abolished.

For that matter, consider the GOP. Even this supposed font of anti-affirmative-action sentiment is rife with race- and gender-conscious provisions. For example, the rules of the Republican National Committee insist that the chair and co-chair must be of different sex. Last year the party made an extraordinary effort to elect more African Americans; it brags that it affirmatively recruited 25 blacks to run for Congress. The GOP's big "outreach" success last year was the election of Oklahoma's J.C. Watts, only the second black Republican member of the House in modern times. And Mary Crawford, press secretary to GOP party chief Haley Barbour, vows to do much more: "In order for the party to grow, we have got to have role models--up-front, highly visible spokespeople."

Republican Congressman Robert Dornan, a staunch conservative waging a long-shot campaign for the 1996 presidential nomination, has gone so far as to pledge that his running mate would "most probably be of Jewish heritage or African American heritage." Whatever. But even if a more likely interracial political flirtation--the GOP's intense on-again, off-again affair with Colin Powell--comes to naught, rest assured that the Grand Old Party, acutely conscious of its lily- white image and eager to appear more like America, will have women and minorities prominently displayed on the podium at its San Diego convention at all times.

So where does all this leave those who continue to dream of one day achieving the goal of a truly color-blind America, a land where citizens are judged solely by the content of their character? Dreaming. As long as there are distinct races, Boston University's Loury observes, there will inevitably be racial categorization. The challenge the U.S. seems condemned to face is to acknowledge that reality--and still find ways to get along.

James Pinkerton, a former aide to Presidents Reagan and Bush, is the author of What Comes Next: The End of Big Government--And the New Paradigm Ahead (Hyperion).