Austerity policies are now widely regarded as having failed, and this failure is increasingly obvious in the country elected to act as Austerity's Child. The banking collapse, and the legacy bequeathed by the Irish state's extraordinary September 2008 bank guarantee, has seen society in Ireland reshaped as a petri dish for IMF, European commission and ECB experimentation. Successive waves of cuts have been stipulated by the Troika in return for its loans, but implemented without resistance, and arguably, a degree of enthusiasm, by the two governments of the "post-sovereign" era.

The fiscal adjustment, according to economist Karl Whelan, is the equivalent of "€4,600 per person… the largest budgetary adjustments seen in the advanced economic world in recent times". With annual "adjustments" of €3-4bn flagged until 2015, the euphemism of "purposeful austerity" cannot long camouflage the concerted assault on the – already minimalist – social contract.

With this havoc in its fourth year, it is difficult to recall that 2008 promised what David Graeber describes as "an actual public conversation about… the financial institutions that have come to hold the fate of nations in their grip". As David McNally documents, this promise was merely a preface to the "neoliberal mutation" that insists on states slashing spending to "ensure that working-class people and the poor will pay the cost of the global bank bailout".

In Ireland, this fleeting public conversation never materialised. Accelerating fiscal deterioration overlapped with the political unravelling of the historically dominant Fianna Fáil party, and the destructive intimacy of bankers, developers and ruling politicians became the prime focus of public anger. As Illan Rua Wall argues, the cathartic defeat of Fianna Fáil in February's election ensured that "indignation burnt itself out at the ballot box", with little public reflection, let alone mobilisation, on the possibility of confronting the new government's effortless adoption of austerity.

This relative lack of popular opposition is difficult to explain. Official narratives – both domestic and EU – have praised the "maturity" of the electorate; pitted public and private sectors against each other in a "race to the bottom"; and insisted that "we all partied", a moralising patriotism deployed to draw the politics from the socialisation of bank debt, and from serious consideration of alternative approaches. The current Fine Gael/Labour coalition has invested heavily in being "not Greece"; by showcasing further and faster deficit-reduction, Ireland would be rewarded with interest rate cuts, an earlier than predicted return to the bond markets, and thus regain "sovereignty".

Costas Douzinas recently documented how the IMF blames the failure of its growth predictions, and austerity measures, on the impact of Greek public resistance. Yet in well-behaved not-Greece, the same bad medicine has resulted in a rising deficit, stagnant growth, sustained emigration, and unemployment at about 15%. In its latest quarterly report, the IMF praised Ireland's "exceptional" efforts to meet its targets, but this praise comes at a time when the fiction of a reward for good behaviour is falling apart.

Fine Gael/Labour took ownership of the austerity agenda in December's budget, implementing more massive cuts to public expenditure and social protection, and stoking widespread pre-budget anxiety as to whether dole payments or children's allowance would be cut. This has led to some rebellion in Labour's parliamentary party, and a burgeoning campaign, led by several TDs, against a flat-rate household charge. In this context, the prospect of a referendum on the new eurozone rules that promise permanent austerity may act as a lightening conductor for political opposition and community resistance.

It is clear that "austerity" primarily involves rapidly socialising as much bondholder debt as possible, in advance of a possible default. The recent European council summit meeting may result in making permanent much of the current framework of external oversight of the Irish public finances. The fiscal compact, if passed into law, would constitute the most revolutionary development in the Irish economic landscape in the history of the state. The strengthening of budgetary surveillance by the European authorities, the balanced budget amendment, and the inclusion of automatic, treaty-prescribed sanctions for transgression, could condemn Ireland and other eurozone countries to lengthy periods of economic stagnation.

The far-reaching implications of the fiscal compact will surely outweigh political anxiety about volatile public opinion, and result in a referendum. Should the government decide otherwise, it is almost certain that a constitutional challenge will be made, though it remains far from certain that the supreme court would demand that the fiscal compact be ratified by referendum, rather than parliamentary statute.

A referendum would constitute a major political event – both for Ireland and the EU. Referendums may be blunt instruments for agreeing and ratifying complex policy choices, but the government has already framed any such event as an existential social choice – a referendum on Ireland staying in the euro or departing to a dystopian future. Be that as it may, what Ireland needs more than anything is that long postponed public conversation. In particular, we need to ask not just what kind of society we want, but what will be left of society if the latest neoliberal mutation is signed into law.