These notes were the basis of a report by João Machado to the Fourth International Bureau meeting in October 2025.
I
1. We are still living under the influence of the tremendous economic crisis that began with the financial crash of 2008. The neoliberal capitalist mode of operation can no longer guarantee the rates of growth, profit, and accumulation seen in the late 1980s and 1990s.
2. Neoliberal globalization is in crisis. Obviously, Trump's abrupt moves since January have exacerbated this crisis. The hegemon in crisis is trying to reassert itself.
3. The digitization of production and consumption processes, which has been underway for 30-40 years and was the basis of the so-called neoliberal restructuring of production, is now intensifying with the accelerated introduction of AI. The implementation of AI is the capital's bet to recover profit and accumulation rates, seeking a leap in labor productivity and profit rates (with reduced employment) and more power for Big Tech.
One development we did not note at the World Congress was the worsening of China's problems, especially overproduction across various sectors and a reduction in its growth rates, which are now below 5%.
Given this fact and the mess left by Trump, one would expect the global economy to be in a worse state at this point.
But this did not happen at its October meeting, the IMF changed its forecast for global GDP growth this year from 3% to 3.2% (in April it had reduced its projection, and in July it had already increased it slightly), and maintained its forecast for next year at 3.1%.
There are many inequalities—Europe (where, except for the United Kingdom, the other three major economies are expected to grow less than 1%) and Japan, for example, are in a much worse situation.
The IMF has assessed that the global economic situation may worsen. In the United States, for example, inflation could be a problem (mainly due to Trump's tariffs, with some contribution from the crackdown on immigrants).
The World Bank has made slightly worse forecasts: global growth this year of 2.3%.
On the other hand, the economies of the "Global South," even though they have growth rates close to the global average, face significant problems, especially the volume of their debts and the financial burden of interest payments.
Indeed, the global economic situation is not good, but it is not in a recession, even though some countries are in near-stagnation.
Why has the global economic situation not worsened?
Could political aversion to Trump influence the assessment by Marxist economists (and critics in general) of Trump's negative impact on the economy, and could the equally negative assessment by liberal economists and the IMF be motivated by their ideological defense of free trade?
In this case, probably not.
II
There are two basic explanations for why the global economy is not worse off.
- Trump did less damage than he claimed—the mess was not as nasty as he said.
The first is that, after all, Trump did not do all the damage he had promised. He backtracked on many tariff announcements, and the "Liberation Day" (April 2) of the big tariff announcement was declared nothing more than an example of his "art of negotiation." In fact, Trump secured some favorable negotiations for the US. For this and other reasons, international production chains have remained intact so far.
However, several economists (including the IMF) point out that it is still too early to assess the negative impact of Trump's mess. The IMF points out, for example, that since Brexit began in 2017, "business investment continued to grow in the period immediately following the UK's departure from the EU and only began to decline steadily from 2018 onwards," it said.
Another essential thing to remember is that the problem with Trump's mess is not just tariffs, but also
a) the significant increase in uncertainty, which is always bad for investment.
b) The hunt for immigrants hurts the economy, as even conservative economists and the IMF recognize.
In addition to other problems.
- AI bubble
The other explanation, mentioned by both Marxist economists (of whom Michael Roberts is a good example) and the IMF, is the Artificial Intelligence bubble (and the technology sectors in general). Michael Roberts quotes economist Ruchir Sharma of the Rockefeller Group:
"Despite growing threats to the US economy—from high tariffs to the collapse of immigration, the erosion of institutions, rising debt, and persistent inflation—big business and investors seem unfazed. They are increasingly confident that artificial intelligence is such a powerful force that it can overcome all challenges."
AI companies accounted for 80% of US stock gains in 2025. This situation is helping to finance and drive US growth, as the AI-driven stock market attracts money from around the world.
As Roberts points out, "the AI investment 'bubble' (measured as the price of shares relative to a company’s ‘book value') is 17 times larger than the frenzied dot-com bubble in 2000 — and four times larger than the subprime bubble in 2007." Roberts provides additional data that reinforces the conclusion that a bubble is developing (e.g., calculations of the ratio of stock prices to the companies' profits).
In fact, as already noted, this is also affirmed by the IMF and many other economists.
More striking is that US economic growth in the first half of 2025 was almost entirely due to investment in information processing equipment and software, which accounted for 92% of GDP growth. If we exclude these categories, the US economy grew by only 0.1% per year in the first half.
In other words, there is undoubtedly an AI bubble, and it is "pushing the US economy upward" (which obviously has a global impact).
So far, the data show that the productivity gains from AI are modest. If they do not prove to be greater going forward, there will be a "market correction," i.e., falling prices. The bubble will not necessarily lead to a major crisis, as Michael Roberts explains, although some crisis is likely. It all depends on how much these investments will increase business productivity.
And this question remains open. Will the more intensive use of AI meet optimistic expectations of increased productivity and higher profit margins? So far, this has not happened, but it is not out of the question that it may occur in the future.
My opinion is that the arguments that the "AI bubble" and investment in information processing equipment and software are masking the problems caused by Trump's mess—problems that are likely to become more significant in the coming months—are solid.
It is essential to ask: but isn't Trump's policy contributing to the investments mentioned, and isn't that a positive aspect of it?
I don't think so. It is possible that Trump's policies, which are very favorable to Big Tech and its associated interests, are contributing to these investments. Still, this has led to a bubble. If, in the future, these investments contribute to the expected increase in productivity, it will be despite this bubble.
III
The link between economic activity and global warming
I have not seen any articles addressing this issue in either of its two basic senses:
a) the impact that this activity has on global warming
b) the impact that "events" caused by it have on the economy.
An interesting article published in IVP dealt with this (the article on "Storm in a teacup"), but only briefly.
In part, the disregard of the implications of events resulting from global warming on GDP can be explained by the particularities (and limitations) of how GDP is measured: losses are not deducted from output, and the costs of compensating for them are added. However, at some point, which should not be far off, it will be impossible to ignore this impact.
However, at some point, which should not be far off, it will be impossible to ignore this impact.
27 October 2025