I take it as read that the austerity project is an inherently unstable project with a narrow and fissile social base supporting it. There are two ways in which this instability can become a crisis - economic collapse, and political insurgency. But when does crisis become a potential defeat?

Allow for the fact that the ruling classes driving this policy, and the political executives guiding them through parliaments, parlements, Bundestags, senates, Cortes, upper chambers and lower houses, have planned in advance for unpopularity, strikes, and potentially some degree of economic turmoil. The end goal of refuelling the City through a stupendous transfer of wealth from the poor to the rich, of reducing wages, of breaking up the public sector unions, and of opening up more of the state to private profit and speculation, is more than enough to justify some temporary unrest, and even a brief dip in economic growth - indeed, for those of an Austrian persuasion, a renewed recession would arguably help by flushing out more bad investments and debts.

Of course, the political fall-out from this attack on what is essentially still a compromise of some kind between capital and labour could well revitalise those social forces that were so depleted by the Thatcher/Reagan 'revolution'. And the austerity project is certainly generating some unease among ruling class fractions in the United Kingdom. A Conservative government stakes its legitimacy strongly on its ability to make capitalism work better for capital, and if its measures don't appear to be restoring profitability - or even risk making the situation grimly worse - then it can lose business support very quickly. On the other hand, if the marxist analysis is right, then the Conservative Party's role is also to take executive decisions on behalf of its class, the ruling class, to win its political struggles even where that class is itself divided and lacks resolve. And the Tories are ruthless political pugilists who are more than prepared to be hated as long as they can achieve their ends without fundamentally damaging their ability to act as a hegemonic party of the ruling class.

So, what would it take to for them to start worrying about defeat, and backing down? An ominous sign for the government is what is happening on the other frontiers of fiscal retrenchment, where the process is more advanced. In France and Greece, as you already know, political and industrial rebellions are putting austerity governments under severe pressure. In Ireland, the trade unions are being joined by the police, and even by some business lobbies, in opposing Brian Cowen's latest cuts programme. (Obviously, one expects the peelers to be paid off before things go too far, because no government wants to lose effective authority on the streets). The opposition is being generated by one simple fact: the cuts are not even delivering the advertised outcome, of 'fiscal consolidation'. They are actually strangling all signs of economic recovery, thereby increasing the deficit. It's contributing to a profound political crisis for the government, which they're having to try to resolve by coopting opposition parties into the process. That's the sort of scale of crisis, in which fractions of capital start turning against the government of the day, and in which the government's authority and ability to implement its agenda is in question, that would do for the Tories.

The evidence suggests that the British economy is sinking again, as the more far-sighted pundits anticipated. That will worry and potentially divide the capitalist class. Unemployment is rising. The housing markets are also suffering, which will punish the very middle class voters that both Tories and Liberals have been trying to woo. That will contribute to fracturing and eroding the coalition's popular base. The government's popularity was already in the negative before these trends became apparent, and before the first concrete examples of the depth and depravity of these cuts became known. We now have the tuition fees debacle in front of us, and the attack on public sector pensions. We have the signs of industrial action starting in the capital, and potentially coordinated - the germ of an idea that ought to be nationalised has taken root. Considering this, and looking overseas, the government has to be dusting off those worst case scenarios and preparing for a difficult ride.

A situation of this character places a heightened premium on political leadership, and the question is whether the Tories, as ruthless and hard-headed as they are, are made of the same mettle as the bonecrunchers of the New Right. I do not believe they are. I have explained elsewhere why I think they are electorally weak, and ideologically incoherent. It is worth adding that it's been a while since they were the powerful and dangerous entity of the Thatcher era, landing blow after blow on the labour movement. They're out of practise, out of training, only recently recovering from shambolic opposition. No less important is the question of leadership in the organised labour movement, of course, but that is for another post.