For Rick Lazio, the Conservative party nomination for governor of New York was only a means to an end. Lazio and his backers in both the Conservative and Republican organizations believed that securing the Conservative line for him would effectively force Republican primary voters to give him the Republican line if they wanted a small-c conservative to win the general election. It was a gambit that failed. Lazio and his allies underestimated the rank-and-file impatience with establishment politicians that Carl Paladino mobilized for a successful insurgent campaign. Paladino defeated Lazio for the GOP nod by a landslide, while Lazio fended off a petition challenger to retain the Conservative line, making this careerist party hack the most prominent independent candidate in the gubernatorial race.
Given this background, you can understand why Paladino's supporters and the Republican leadership, including a state chairman who had supported Lazio, are now calling on him to stand down. In all likelihood, Lazio had no intention of running exclusively on the Conservative line; his candidacy for the party line was always a sham of independence. It would nearly be no loss if he withdrew. As of today, however, he appears intent on continuing his campaign. He criticized both Paladino and Andrew Cuomo, claimed to be the only candidate with real plans for restoring the state economy, and vowed to have a voice in the campaign for the next six weeks. Reporters note that he did not absolutely rule out stepping aside, but for the time being there's nothing conciliatory in his attitude toward Paladino to anticipate an endorsement.
The Conservative party's future may depend on Lazio remaining in the race. To avoid relegation to the second tier of parties, those who must petition their way onto the ballot instead of getting an automatic line, the Conservatives must get 50,000 votes in the gubernatorial election. For whatever reason, replacing Lazio with Paladino on the Conservative line doesn't seem to be an option, though the Working Families Party is replacing a placeholder candidate with Cuomo after swallowing their pride and endorsing his platform.
Based on his performance in defeat last week, Lazio as an active Conservative candidate should be able to assure the party of retaining its guaranteed place on the next ballot. Apart from renewing the viability of a third party, Lazio's commitment to an active campaign would also preserve a real choice for those New Yorkers who consider themselves conservatives but aren't reconciled to the perceived extremism and self-evident boorishness of Paladino. Those people might finally find the Libertarian party inviting if Lazio finally withdraws, but if he hangs in he'd probably be the more appealing choice.
An active Lazio campaign would leave New York in the odd situation of having a Conservative candidate who is almost universally perceived to be less conservative than the Republican candidate. That may seem to defeat the purpose of the Conservative party, but some people would argue that that purpose was defeated a long time ago. Since the word "conservative" has no meaning independent of context (i.e. what does one conserve?) the possible paradox of Lazio's Conservatism shouldn't trouble us much. Maybe his supporters really believe in conserving something threatened by Paladino or the Tea Partiers who support him. Whether that something is worth conserving is debatable. Less debatable is their right to defy Paladino. If Lazio costs Paladino the election, it won't be Lazio's fault for drawing votes away from the supposedly true conservative candidate. It'll be Paladino's fault for failing to win those votes.