In our section on "Characterization," we mention that Tolkien frequently uses "type of being" to indicate essential aspects of a character's personality. So, the Elves are generally good, while Orcs are always bad. Gandalf is a Wizard, which also makes him wise. But this tool of characterization presents a strange ethical problem to us: is it possible for an Orc to become good? What role does choice play in determining the moral value of a character? If you are an Orc created by Sauron, can you be held ethically responsible for the evil that you do, since you are made that way? Can you even imagine an Orc in Tolkien’s Middle-earth intentionally, selflessly doing good? Race plays a central role in the moral nature of each of these characters, since there are good races (Elves), bad races (Orcs), and ambiguous races (humans). Tolkien’s use of race as a tool for characterization implies that the type of being that you are also determines your spiritual value. And that, it seems to us, gets into really dangerous territory. Where is the room for free will in Middle-earth? What examples do we have of characters who work against their own racial natures, either for good or evil?
Even if it is fictional literature (about mostly non-existent races), Tolkien was wrong to make such sweeping generalizations.
Humans are the morally ambiguous characters in Fellowship of the Ring because Tolkien is human. He couldn't have fairly assigned himself to good or evil.