In a medium saucepan combine potatoes and vegetable or chicken broth. Bring to a boil; reduce heat. Cover and simmer for 10 minutes or until potatoes are tender. Do not drain.
Meanwhile, in a large saucepan cook the green pepper, red pepper, yellow pepper, and onion in hot margarine or butter until tender but not brown. Stir in flour, salt, black pepper, and ground red pepper. Add milk all at once. Cook and stir until thickened and bubbly. Cook and stir for 1 minute more. Stir in undrained potatoes. Heat through.
To serve, ladle soup into individual bowls. Makes 4 servings.