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The Collapse of the Global Economy by AI; Are We on the Brink of Crisis?

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Introduction

Artificial Intelligence, once imagined as a miraculous technology of the future, has now become a dual dilemma. While this technology promises unprecedented productivity and remarkable advances, prominent economists and experts have issued serious warnings about the potential for global economic collapse by AI. This is no longer a science fiction scenario; it's a crisis taking shape that could challenge all the economic structures built over the past decades.
The statistics are alarming: International Monetary Fund analysis shows that nearly 40 percent of global employment is exposed to the impact of artificial intelligence. AI is predicted to eliminate between 20 and 30 million jobs in the United States alone by 2035. But the issue isn't just job loss; it's about the systematic collapse of the economic cycle that could lead to a full-blown crisis.
In this article, we delve deep into the various dimensions of this potential crisis: from mass job displacement and severe economic inequality to investment bubbles, systemic risks, and possible solutions to prevent the catastrophe we may be on the verge of.

Section One: Mass Job Displacement; Destroying Economic Foundations

Unprecedented Speed and Scale of Change

Unlike past industrial revolutions that gradually changed jobs over decades, the AI revolution is transforming the job market at an extraordinary pace. The World Economic Forum's Future of Jobs 2025 report shows that 40 percent of employers expect to reduce their workforce where AI can automate tasks.
The unemployment rate among 20-30 year-olds in technology-related jobs has increased by approximately 3 percent since the beginning of this year, which is significantly higher than their counterparts in other professions and for all technology workers as well. This statistic indicates a worrying trend: even technology workers who were expected to benefit from AI are now early victims of this wave.

Jobs on the Front Line of Danger

Customer service representatives face the highest immediate risk with an 80 percent automation rate, followed by data entry clerks (7.5 million jobs eliminated by 2027) and retail cashiers (65 percent automation risk). But the danger isn't limited to routine jobs.
Affected jobs include:
  • Creative professions: Graphic designers, content writers, photographers
  • Professional occupations: Lawyers, accountants, financial analysts
  • Technical workers: Programmers, data analysts, software engineers
  • Office staff: Secretaries, executive assistants, support staff
  • Construction and manufacturing industry: Production line workers, truck drivers

The Vicious Economic Cycle

When millions lose their jobs, the economic cycle breaks. Unemployed individuals lose their purchasing power, leading to decreased consumer demand. This decline in demand means reduced revenue for businesses, which in turn leads to more layoffs. This is a downward spiral that can lead to a recession or even a great depression.
The top 10 percent of Americans, who currently hold 89 percent of all stocks, are positioned to capture $180 trillion in new AI-generated wealth, widening the inequality gap. This means wealth is concentrated in the hands of a few while the majority of society faces unemployment and poverty.

Section Two: The AI Bubble; An Economic Time Bomb

Unbridled Investments

By the end of this year, the tech industry will have invested more than $700 billion in large language models, a figure that will likely be repeated next year. This level of investment is unprecedented and revives memories of the dot-com bubble.
As AI companies carry valuations in the hundreds of billions of dollars, dozens of new billionaires have emerged this year, and tech giants are investing unprecedented amounts in data centers, investors and analysts are asking the same question: Are we witnessing history repeat itself?

Unrealistic Valuations

Many AI companies trade at astronomical valuations while still lacking a sustainable revenue model. Companies that haven't yet achieved profitability have billions of dollars in market value. This situation is reminiscent of the dot-com bubble era that burst in 2000, destroying trillions of dollars in market value.
Signs of a bubble include:
  • High valuations without corresponding revenue backing
  • Emotional investments without thorough analysis
  • Fierce competition to capture the market at any cost
  • Big promises without tangible results
  • Over-concentration on a specific technology

Risk of Financial Collapse

If the AI bubble bursts, the consequences could be catastrophic. Investors will lose trillions of dollars, financial institutions will face crisis, and confidence in the stock market will be destroyed. This could lead to a global financial crisis similar to the 2008 crisis, but with greater intensity.
Moreover, large tech companies that have spent billions of dollars on AI infrastructure may face liquidity problems if expected returns are not realized. This could lead to mass layoffs and a sharp reduction in technology investment.

Section Three: Monopoly and Inequality; The Collapse of Economic Democracy

Concentration of Economic Power

A world where only a few powerful AI companies control production could create a new era of economic inequality worse than ever. Currently, companies like OpenAI, Google, Microsoft, and Amazon are dominating the AI industry.
This technological monopoly can lead to:
  • Complete control over global data: Large companies have access to all important data
  • Setting prices at will: Without real competition, companies can impose astronomical prices
  • Deep political influence: The wealth and power of these companies allow them to influence policymaking
  • Stifling innovation: Small companies and startups will be unable to compete

Catastrophic Class Divide

Wealth inequality, which is already at historic highs, could reach unbearable levels with the expansion of AI. A class of ultra-wealthy elites who benefit from AI technology stands against millions of unemployed and poor workers.
This situation could lead to widespread social unrest. Economic collapse causes social unrest - if millions lose their jobs, might we witness AI-driven protests, riots, and revolutions?
History has shown that severe economic inequality always leads to political and social instability. From the French Revolution to the Occupy Wall Street movements, when people feel the economic system is against them, they take to the streets.

Section Four: Systemic Risks; The Fragility of the Global Economy

Algorithmic Decision-Making and Cascading Crises

In a future economic recession, widespread use of artificial intelligence can lead to intensification and acceleration of the crisis. This danger manifests itself in three key areas:
A) Employment Structure Collapse: During economic downturns, the traditional corporate approach has been to retain employees despite declining profitability. However, the emergence of AI technologies has fundamentally changed this equation. International Monetary Fund reports warn that in future economic crises, a wider spectrum of professions will be at risk of replacement, including specialized and cognitive jobs that have remained immune to the automation wave until now.
The dangerous paradox is this: precisely when maintaining the workforce is essential to prevent economic collapse, organizations tend to move faster toward replacing humans with machines, and this vicious cycle drives the crisis to its core.
B) Capital Market Turbulence: Financial institutions today heavily rely on deep learning models for trading and portfolio management. The problem is that these intelligent systems are trained by analyzing historical data, and in crisis situations where past patterns are no longer effective, they make wrong and dangerous decisions.
When hundreds of trading algorithms show similar reactions simultaneously, a wave of panic selling begins and asset values plummet in a fraction of time. The complexity and opacity of these systems make controlling and managing such crises nearly impossible.
C) Global Supply Network Collapse: Economic enterprises increasingly use AI algorithms to forecast demand levels and control warehouse inventory. During economic recessions, these algorithms designed on outdated data suffer from widespread computational errors leading to severe turbulence in production cycles and storage. The result of this chaos will be prolonged delays and shortages of vital products throughout the international supply chain.The fundamental problem is: AI algorithms are trained based on historical data. If economic conditions change rapidly (which is common during crises), these algorithms can make completely wrong decisions and exacerbate the crisis.

Dangerous Dependence on Automated Systems

Various industries are rapidly adopting AI automated systems for managing supply chains, production, distribution, and even strategic decision-making. This dependence could lead to economic paralysis in the event of a systemic failure.
Imagine:
  • Automated financial systems fail and cause a stock market crash
  • Supply chain management algorithms make wrong decisions and create shortages of essential goods
  • Banking AI systems malfunction and cut off access to money for millions

Lack of Transparency and Accountability

Many AI systems are black boxes - even their designers don't know exactly how they arrive at certain decisions. This lack of transparency in critical economic systems is very dangerous. If an algorithmic decision leads to a crisis, no one may be able to understand or quickly fix the problem.

Section Five: Current Reality; Warning Signs

Rising Unemployment in the Tech Sector

The three-month average unemployment rate for May to July in 2022 and 2025 shows that in the tech sector, which was expected to benefit most from AI, unemployment is increasing. This is an early warning signal.
Entry-level jobs that are disproportionately filled by young workers are particularly at risk, with nearly 50 million American jobs affected. 14 percent of all workers have already been displaced by AI. This statistic shows that job displacement is no longer a future threat - it's happening now.

Warnings from Prominent Economists

Concerns about public debt are rising as defense costs increase, and 86 percent of senior economists expect increased government borrowing. AI is expected to drive growth, but 47 percent predict net job loss will occur.
This shows that even among experts optimistic about AI's growth potential, there is serious concern about job loss. Moreover, increasing government debt could lead to a government financial crisis, which itself is a serious threat to economic stability.

Bubble Burst; Early Evidence

Some AI companies that started with high valuations are now facing financial problems. Investors have become more cautious and no longer easily invest in every AI startup as in the past. This could be an early sign of the beginning of the bubble burst.

Section Six: Solutions and Ways to Salvation

Universal Basic Income (UBI)

One of the most serious proposed solutions to combat mass job displacement is Universal Basic Income. In this system, every citizen, regardless of employment status, receives a specific amount of money monthly.
UBI Benefits:
  • Guaranteeing a minimum standard of living for all
  • Maintaining consumer purchasing power and preventing demand collapse
  • Opportunity for retraining and career change without financial stress
  • Reducing inequality and social unrest
Challenges:
  • Very high cost for governments
  • Risk of inflation
  • Political and ideological opposition
  • Question of funding source

Wealth Tax and Technology Company Taxation

To finance support programs and reduce inequality, progressive taxes on wealth and income of large technology companies are essential. These companies, which profit most from AI, should have a greater share in supporting society.
Proposals include:
  • Wealth tax for the ultra-wealthy
  • Tax on use of artificial intelligence and robotics instead of human workers
  • Tax on algorithmic transactions
  • Tax on data collected by technology companies

Investment in Education and Retraining

It's critical that governments and the private sector invest extensively in education and retraining programs so workers can adapt to changing job markets.
Key training areas:
  • Technical skills related to artificial intelligence and machine learning
  • Human skills that AI cannot replace: creativity, empathy, critical thinking
  • Entrepreneurship and business startup
  • Adaptation skills and continuous learning

Smart Regulation

Governments must create strong regulatory frameworks for AI that encourage innovation on one hand and prevent socioeconomic abuse and harm on the other.
Key regulatory areas:
  • Requiring transparency in algorithmic decision-making
  • Privacy and personal data protection
  • Safety standards for critical systems
  • Restrictions on monopoly and concentration of power
  • Accountability requirement in case of error

Promoting Inclusive AI Development

Instead of allowing only a few large companies to dominate the AI industry, we should promote an inclusive development model:
  • Supporting startups and small companies in AI
  • Encouraging open source projects in AI
  • Democratizing access to AI tools
  • Creating public research centers for developing AI technologies

International Cooperation

The potential AI crisis is a global issue requiring international cooperation. Countries must work together to:
  • Create global standards for AI development and use
  • Prevent monopoly and destructive competition
  • Share knowledge and resources
  • Create coordinated support systems for displaced workers

Section Seven: Future Scenarios; Best and Worst Case

Pessimistic Scenario: Complete Collapse

In the worst possible case, we will witness widespread economic collapse:
  1. Stage One (Near Future): Job displacement accelerates, unemployment rate increases sharply, consumer demand plummets
  2. Stage Two: Businesses face crisis, AI bubble bursts, financial markets crash
  3. Stage Three: Global financial crisis occurs, governments unable to control the situation, widespread social unrest occurs
  4. Stage Four: Collapse of economic, political, and social systems, return to economic dark ages
In this scenario, human civilization may face the largest economic crisis in its history, making even the Great Depression of the 1930s seem small in comparison.

Optimistic Scenario: Managed Transition

In the best possible case, humanity can successfully navigate this transition:
  1. Preventive Actions: Governments quickly implement support systems like UBI
  2. Smart Regulation: Effective legal frameworks for controlling AI development and use are created
  3. Investment in Education: Extensive retraining programs prepare workers for new jobs
  4. Fair Wealth Distribution: Progressive taxes and redistribution policies prevent extreme inequality
  5. Inclusive Innovation: AI technology is developed in a way that benefits everyone, not just a few
In this scenario, AI leads to a golden age of human prosperity and flourishing, where humanity is freed from hard and repetitive work and can focus on creativity, innovation, and personal growth.

Realistic Scenario: A Mix of Both

Given history, the middle scenario is most likely:
  • Some countries and sectors successfully adapt, others face crisis
  • Inequality increases but doesn't reach catastrophic levels
  • Periodic economic recessions occur but complete collapse doesn't happen
  • Social tensions increase but don't lead to revolution
  • Gradual reforms are implemented but slow and incomplete

Section Eight: What Can We Do?

Individual Actions

As individuals, we can:
  • Continuous Learning: Equip ourselves with new skills that are unlikely to be automated
  • Skill Diversification: Don't depend on just one profession
  • Entrepreneurship: Explore business opportunities in the AI era
  • Political Awareness: Support politicians who have realistic plans for managing the transition to the AI era

Business Actions

Companies should:
  • Human-Centered Approach: Instead of focusing only on cost reduction through automation, think about creating long-term value
  • Workforce Investment: Train employees to work with AI, not replace them
  • Social Responsibility: Consider the impacts of their technology decisions on society
  • Transparency: Be honest about AI use and its impact on employees

Government Actions

Governments must urgently:
  • Strategic Planning: Develop comprehensive plans for managing the transition to the AI era
  • Social Security: Create strong support networks for displaced workers
  • Preventive Regulation: Pass necessary laws before crisis occurs
  • Public Investment: Invest in education, infrastructure, and research

Section Nine: Lessons from History

Past Industrial Revolutions

History shows that technological revolutions have always been accompanied by periods of disruption and adaptation:
First Industrial Revolution (1760-1840):
  • Steam machines replaced manual workers
  • Luddite riots where workers destroyed machines
  • Decades of exploitation and poverty before reforms
  • Eventually, creation of more jobs and higher general welfare
Second Industrial Revolution (1870-1914):
  • Electricity and factory assembly lines
  • Displacement of farmers to cities
  • Growth of urban working class and labor movements
  • Gradual improvement of living conditions
Digital Revolution (1950-2010):
  • Computers and internet
  • Elimination of many office and manufacturing jobs
  • Creation of entirely new industries
  • Increased productivity but with greater inequality
Key Difference in AI Revolution:
The critical difference is that previous revolutions mainly automated physical work, but AI can also automate cognitive and creative work. This means a wider range of jobs are at risk and there are no clear alternatives.
Moreover, the speed of change is unprecedented. The first industrial revolution took decades to show its full impact, but AI can transform entire industries within a few years.

Section Ten: Opposing and Critical Voices

Technology Optimists

Some experts and industry leaders believe the concerns are exaggerated:
Their Arguments:
  • AI will create more new jobs than it destroys
  • Higher productivity leads to economic growth and greater welfare
  • Humans have always found ways to adapt
  • History shows technology fears are usually unfounded
Response to These Arguments:
While these points are somewhat valid, they ignore the unprecedented speed and scale of the AI revolution. Current evidence shows job displacement is faster than new job creation. Moreover, many new jobs require very advanced skills that not all displaced individuals can easily acquire.

Deniers

Others believe the AI threat is fundamentally unrealistic:
Their Arguments:
  • AI models are still very limited
  • Many jobs require human interaction that AI cannot replace
  • Legal and regulatory issues will slow development
Response to These Arguments:
While it's true that AI still has limitations, the speed of progress is remarkable. What seemed impossible a few years ago is reality today. Large language models, generative AI, and advanced robotics are rapidly changing technological limitations.

Conclusion: On the Brink of a Historic Turning Point

The collapse of the global economy by artificial intelligence is no longer a far-fetched science fiction scenario, but a real and immediate danger that requires serious attention and urgent action. We are on the brink of a historic turning point that could lead to a golden age of prosperity or the darkest economic period of humanity.
Key factors that will determine our fate:
  1. Speed of Response: The faster we act, the better chance we have of managing the transition
  2. Global Cooperation: Without international cooperation, countries cannot face this challenge alone
  3. Political Will: Political leaders must have the courage to make difficult but necessary reforms
  4. Corporate Responsibility: Technology companies must think beyond short-term profit
  5. Public Awareness: Citizens must be aware of the risks and opportunities and demand action
Artificial intelligence is the most powerful technology humanity has ever created. How we use this power determines whether it becomes a liberating tool or a destructive instrument. The choice is with us, with our societies, and with our leaders.
The time to act is now. Every day of delay increases the likelihood of the pessimistic scenario. But if we act with intelligence, empathy, and long-term vision, we can not only survive this transition but reach a better world where technology serves humanity, not vice versa.
The fundamental question is not whether AI will change the economy - but how we manage this change. The future is not yet written, and we still have the opportunity to shape it. But the window of opportunity is closing.