I'm confused. How do you know the son is the favourite? How does she discipline your 21 month-old granddaughter? In what ways do you see her favouring the son? Perhaps she just has a very passive parenting style -- one that doesn't match with yours. It's so common for mothers-in-law and daughters-in-law to disagree about the "right" way to be a parent. It sounds like you are concerned, but ultimately, they are her children, not yours, and it's not up to you to determine how they are disciplined. If there were issues of child abuse or neglect happening, it would be your right (and your responsibility) to report it to the authorities, but absent those factors, you really don't have a say in the matter.

I also don't think it's safe to assume she has BPD because she rages at her husband and curses, etc. It sounds like they have some major problems in their relationship... and I agree with AlteredState that your son's drinking is his own choice. He needs to take responsibility for his own behaviour. Having a raging wife doesn't MAKE him drink. He chooses to drink. For his own good, he needs to find a way to improve the relationship or get out of the relationship... and accept responsibility for his own actions. I'm sure they would both benefit from counselling. It's unfortunate that they're unreceptive, but that's beyond your control.

Their relationship sounds terribly unhealthy, but I am glad to hear that your daughter-in-law doesn't direct that rage at her son (and I certainly hope she doesn't direct it at a 21 month-old toddler). In my opinion, the screaming and drinking that is happening in the relationship is more concerning than the fact that your daughter-in-law doesn't discipline her son. That kind of environment is extremely damaging to children and I wouldn't be surprised if it is contributing to the acting-out behaviours of your daughter-in-law's son. Children need to feel safe and secure and they can't feel that way when they have a chaotic, unstable home life. Perhaps if you talk to your son about how this could be affecting the children it would encourage him to do something to improve the situation. I'm assuming you have a much closer relationship with him than you do with your daughter-in-law, so perhaps he would be receptive. Good luck. My heart breaks for the children. I hope things get better.