Supporters of the Conservative-Liberal Democrat pact used to say that any alternative alliance would have been a "coalition of losers". It is not much consolation today to have a parliament of losers. The latest polls show that the three big parties are losing with the electorate. The coalition is unpopular, David Cameron's ratings are slumping, the Liberals are at a nadir and Ed Miliband is dying a slow death. Particularly bad for Labour is that its credibility on the economy is worse than the Tories'.

This isn't just happening in the UK. In the US, both the Democrats and Republicans are held in low esteem. In Greece, where the two major parties may be heading toward a grand coalition of cutters, three quarters of the electorate believe neither Pasok nor the New Democracy are fit to run the country. Where once, this withdrawal from the major parties would have been taken as evidence of a disengagement from politics, that is hardly a plausible claim amid mass protests in Athens, Wisconsin, Madrid and – on 30 June – the UK.

What is happening? The short answer is "austerity". Mass dissatisfaction with the major parties is tied to pessimism about the economy, and a view that the country is headed in the wrong direction. Living standards are sliding in all of the core capitalist economies, but most of all in those countries where austerity has been most advanced – Greece and Ireland. There is a bipartisan consensus in most of these nations' parliaments in favour of some form of austerity politics, despite its unpopularity.

One might expect social democratic parties to take a different approach, to mobilise their constituencies around a defence of public services and social security. But their long years of complicity in managing neoliberalism means they are unable to think of an alternative to spending cuts. In opposition, they offer gradual and responsible austerity, but they still mean to cut, and cut deep. In government, the emphasis shifts from gradual to deep. This inability to pose the alternative is what leaves Miliband and his shadow cabinet floundering.

This process doesn't only threaten the major parties. At stake is the very legitimacy of the states carrying out these measures. Hitherto, they have relied on two key sources of public support. One is the ideology of prosperity, in which great inequalities of wealth are tolerable so long as the economy keeps growing. But in the last 30 years, that has depended on record private debt, which is no longer sustainable. The other is welfare, in which the government will provide a basic minimum of nourishment, health and education so that, in theory, all can participate in the opportunities of a market economy. If the market fails, the government will be there with a safety net. This is now under unprecedented attack.

Given the low regard in which parliamentary institutions and the major parties in them are held, it is no surprise that the political struggles of the day are taking place in civil society – streets, campuses and workplaces. On 30 June, a coalition of workers and students will be taking to the streets. Hundreds of thousands of workers will be participating in strike action to defend jobs and services.

Yet there is a warning in the latest poll results for anyone who thinks this is sufficient. Most of the public supports the government's measures on public sector pensions. This suggests that, so far, the left has not begun to shift the dominant ideological articulations underpinning austerity. The struggle is ultimately over the distribution of the social product, but these antagonisms are resolved at the level of politics. And it is partly because of the lack of a credible political force with a clearly defined alternative to austerity that the coalition has been able to ride out growing unpopularity, localised strikes and student rebellions. If social democratic parties are unwilling to define such an alternative, this leaves it to the left-of-social-democratic forces to do so. Yet so far, these forces have remained disparate, their analyses largely propagandistic.

It would also be foolish to underestimate the ability of the major parties to reconstitute their popular base. The Tories' core vote is behind austerity. And they are past masters at macroeconomic manipulation intended to make just enough voters feel wealthy enough for long enough during election time. Labour, through its union affiliations and its base in working-class communities, will preserve its dominance over the left-of-centre vote for as long as there is no credible alternative. The major parties are in crisis, but a crisis is not terminal unless there are forces ready to exploit it.