This passage in “Private Truths, Public Lies” comes after a criticism of neoclassical economics for taking preferences as autonomous and given, particularly in application to politics.
“Another tradition that treats personal conceptions of self-interest as immutable is a Marxian-inspired literature that seeks to disprove the possibility of oppressed groups becoming mentally enslaved by their oppressors. James Scott, a contributor to this literature, observes that the oppressed act out their assigned roles without losing sight of their overriding interest, the overthrow of the oppressive order. “There is little chance,” he writes, “that acting a mask will appreciably affect the face of the actor. And, if it does, there is a better chance that the face behind the mask will, in reaction, grow to look less like the mask rather than more like it.”* Scott’s argument rests on reactance theory, which holds that under strong physical threats overt agreement will coexist with covert reactance – an unexpressed desire to rebel.** In applying reactance theory to politics, Scott confuses resistance to an oppressor with cognitive autonomy from the oppressors’s ideology. One can despise an oppressor, and still, precisely because of the social conditions created by the oppressor, fail to develop a worldview that is essentially one’s own. To show that the oppressed do not accept every element of the oppressor’s worldview is not to prove that they remain mentally uninfluenced.”
* James C. Scott, Domination and the Arts of Reistance: Hidden Transcripts
** Sharon S. Brehm and Jack W. Brehm, Psychological Reactance: A Theory of Freedom and Control

I haven’t actually read any books by those Marxists of the Frankfurt School, but a common theme is supposed to be that the failure of the workers to overthrow capitalism is due to their “false consciousness” resulting from the ideological hegemony of capitalism. Kuran actually comes across like a member of the American academic right earlier in the book, since some of his major examples of preference falsification are communism and affirmative action, but here at least he does not.
UPDATE: Kuran gets more Marxist in further discussions of caste. He writes:
“The Marxist thesis [that the economically dominant class is the source of inegalitarian ideologies] happens to conflict with Marx’s views concerning the origin of ideologies serving the economically dominant. Although Marx never developed a coherent theory, scattered passages in his writings suggest that he ascribed to the oppressed both the motivation and the ability to invent such ideologies. The motivation reflects a desire for peace of mind. By concocting theories pointing to the inevitability and fairness of their fate, the exploited equate possibility with reality, thus absolving themselves of the duty to improve their lot. In modern parlance, they reduce their cognitive dissonance. As for the ability to form beliefs beneficial to the privileged, it rests on a cognitive illusion: the tendency to believe that what is true for oneself is also true for one’s group. The exploited individual generalizes his own powerlessness vis-a-vis the social order to his class as a whole*. According to Marx, the untouchables grow the “opium” that puts them to sleep according to his followers in Indian studies, this opium is forced on the untouchables by the brahmans.”
* “Marx’s pertinent passages are presented and interpreted by Jon Elster, Making Sense of Marx […]. Elster develops this theory of ideology in his Sour Grapes: Studies in the Subversion of Rationality […], drawing on Paul Veyne, Le Pain et le Cirque

I recall the line “religion is the opiate of the masses”, but I though Marx was arguing that it was produced by the the ruling class for their benefit and the masses would be passive recipients until concentration in factories awakened their class consciousness.

I mentioned above that one of Kuran’s cases is affirmative action. In one of the later chapters he makes a strange argument against “white guilt” and collective action/coalition politics theories of affirmative action. He says they fail to explain why whites whose interests are harmed by it (such as a hypothetical student who loses a spot at a school they apply to) support it. But nowhere does he present any evidence that those harmed by it actually support it, and all the evidence he references in previous chapters (such as one titled “The Unwanted Spread of Affirmative Action”) says the opposite! To that I would add the repeated referendums against it which have won overwhelming support, particularly among white voters. So it would seem the public information that many people oppose affirmative action is readily available and thus his analogies to communism, the caste system or some precepts of Islamic civilization fail. Perhaps people are not as aware of the mechanisms by which affirmative action works and thus what shortcomings it has, or are not as outspoken in their public opposition as Kuran would like them to be, but that depends on the more subjective evaluation of what reaction one considers appropriate.