Two recent exercises by Chicago Democrats, the St. Patrick's Day parade and the primary election four days later, help explain the vague but deepening sense of unease in this city's second year of life without Richard J. Daley.

According to longtime marchers and watchers, this year's parade sadly lacked the verve displayed when Mayor Daley marched in front. The primary election exposed a multitude of petty rivalries within the Democratic organization, many along ethnic lines, in stark contrast to the old Daley machine's solidarity.

To Democrats here, the palpable decline of the party organization is far more alarming than listlessness of St. Patrick's Day. The party's breakdown, they fear, may precede similar deterioration of the entire power structure. But in the long run, less obvious post-Daley decline in morale poses the greater danger to Chicago's famed vitality.

Unmistakably, Daley is missed - more than friends or foes thought possible when he died late in 1976. "I never thought I'd say this," one anti-Daley reformer told us, "But something very vital is missing." It is that attitude that spawns doubts as to whether Chicago can remain uniquely dynamic amidst the lassitude of the nation's decaying big cities.

Although no mere mortal could have duplicated Daley's dominance here, dilution of his authority was accelerated by dividing his two roles: mayor and party chairman. Mayor Michael Bilandic steers clear of party problems; Cook County Democratic Chairman George W. Dunne (also president of the county board) keeps arm's length from the mayor's office. "A guy in the organization who wants something done finds out there's nobody to go to who can get it done," a disgruntled ward committeeman complained to us.

This state of affairs is blamed for proliferation of intra-organization fights for state legislative seats in Tuesday's primary (with chairman Dunne even withholding support from an organization candidate in one district). As was widely forecast before Daley's death, ethnic rivalries, which he held in check, have broke out - particularly Polish v. Irish.

A classic case: the dispute over party endorsement for a state senate vacancy between the rival Polish and Irish candidates backed by two leading Daley lieutenants, Rep. Dan Rostenkowski and Chicago Park District Superintendent Ed Kelly. "There is just no way this would have happened under Richard J. - just no way," Kelly told us.

There is also no way that Kelly's open criticism of Dunne as party chairman would have occurred under Richard J. The prospect of Kelly's challenging Dunne for the party leadership adds a note of party uncertainty unknown during Daley's long reign.

Actually, mayor Bilandic's isolation from Democratic politics pleases Chicago's tightly knit captains of business and industry - mostly Republicans who live and vote outside the city. "Bilandic is really easier for us to work with than Daley, less partisan and less political," one prominent State Street merchant told us.

But that overlooks the question of whether Bilandic provides adequate leadership. The judgment is mixed, but some businessmen believe he has not pushed hard enough fo development of the Loop (Chicago's famed downtown business district). And that comes during cautious, whispered worries by politicians and businessmen that the Loop is showing early signs of becoming largely populated by blacks, the warning signal elsewhere for economic decay. Indeed, the Loop's sidewalks are largely filled with blacks after dark.

That process was well under way before Daley died, and there is doubt that even a reincarnated Daley wearing his two hats at City Hall could reverse it. Nevertheless, there are Chicagoans who think he could have, and therein lies the danger.

Complaints that difficulty in clearing the past winter's heavy snowfall from Chicago's streets would never have happened under Daley probably have no basis in fact. But the mere thought that the slogan "The City That Works" is outmoded could begin the numbing paralysis of will that afflicts New York City.

"The city wasn't functioning all that well under Daley, but he provided the facade," contends one unreconstructed anti-Daley Democrat. Yet, facade can be essential. Not until New Yorkers lost self-confidence under John V. Lindsay did the city's decline enter the disaster stage. That is why the spiritless St. Patrick's Day parade, even more than the Democratic party's internal troubles, shows why Daley is missed.