No American election for many years, maybe none since 1960, has been as gripping as this year's, outside as well as inside the country. It is of course the astonishing and wonderfully unlikely figure of Barack Obama who has captivated everyone from Europe to China to his ancestral Africa. But seen from here in the United States itself, the real story of the election is not so much the irresistible rise of Obama as the implosion of American conservatism.

Although his team has been brilliantly organised in terms of mastering the internet, fundraising and motivating younger voters, Obama has fought an almost passive campaign. Some of what he has done this year has actually been dull or mediocre, from his choice of Joseph Biden as running mate to his feeble speech in Berlin. Now and again he has stung like a bee, but more often he has floated like a butterfly, displaying preternatural coolness and calm. He has been less a boxer raining blows than a judo playeer using the other's bulk and ungainliness against him, waiting for his opponent to self-destruct and defeat himself.

As he duly has. John McCain's campaign has almost petered out amid gross incompetence, fatuous invocations of Joe the Plumber, foolish stunts – his short-lived promise to suspend the campaign altogether in response to the financial crisis –and ugly spite. And if Obama's choice of running mate was uninspiring, McCain's choice was ludicrous.

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"Don't worry too much about Sarah Palin," the neoconservative Robert Kagan has just said in an interview with the German magazine Der Spiegel. But many Americans worry deeply about this ignorant and bigoted woman, not least because, were McCain to win, her actuarial chances of succeeding as president would be quite high.

In the words of Kagan's fellow neocon David Brooks of The New York Times, Palin is a "cancer on the Republican Party", and even some of McCain's own aides have now turned on her. Their campaign teams have fallen out among themselves, bickering, backstabbing and holding "pre-mortems". "There are many ways to lose a presidential election," says David Frum, a former Bush speechwriter. "John McCain is losing in a way that threatens to take the entire Republican Party down with him." There will be much scapegoating to come after a defeat all Republicans now privately expect.

Besides that we have the highly diverting parade of defectors, the "Obamacons" or Republicans for Barack. The most eminent is Colin Powell, President Bush's sometime Secretary of State, although there are also William Weld, a former Republican governor of Massachusetts, and Scott McClellan, once George Bush's press secretary. Even some Republicans running for office, such as Joel Haugen, an Oregon congressman fighting a tough battle for re-election, have backed Obama.

All of this is only symptomatic of the deeper bankruptcy of the American right. They don't know what they are doing or where they are going. The Cold War is over, won by the West, even if the outcome in Russia and east Europe hasn't been much of an advertisement for the capitalist market economy, and even if proclaiming "the end of history" now looks hubristically premature.

Large political parties, especially under the American (as the British) electoral system are bound to be coalitions, often of highly disparate elements. That was true of the Democrats in their heyday under Roosevelt to which many are now harking back, a weird alliance of organised labour, city bosses, intellectual progressives and Southern segregationists.

But the Republicans have become an equally improbable mixture of fiscal conservatives, religious reactionaries and neocons, who really have little in common beyond a shared enemy in the form of "liberalism" or what passes for such in America. The nomination of McCain himself was a sign of the conservatives' difficulties. He defeated his rivals because of his seeming authenticity and decency, but many on the Right greatly dislike him as ideologically unsound.

Then came the anointing of Palin, which may prove to have been a decisive moment. In a most entertaining article in The New Yorker, Jane Mayer describes not one but two sea cruises to Alaska in the summer of last year arranged by right-wing magazines of different hues, National Review and Weekly Standard. There they met Palin and fell for her – "my heartthrob," says William Kristol – even though the advocacy of this gormless backwoodswoman by clever rightist intellectuals was the height of cynicism.

It was also a mark of despair. "Nothing is inevitable,"McCain said on Tuesday, but a victory for Obama now looks very likely indeed, and if the turnout of younger voters rises sharply it could be a landslide. We may all yet be disappointed by President Obama, but this election will still be a thrashing from which the Right will take a long time to recover.

Geoffrey Wheatcroft's books include 'The Strange Death of Tory England'