Hovering over Dubai is a cloud called nemesis. The first time I saw the place two years ago through a plane window, its towers were hovering in the heat over the desert, gulping up water and energy and fussed round by reputedly a quarter of the world's construction cranes. Even then the vision was unmistakable, of Ozymandias and his "vast and trunkless legs of stone".

When prices go up, buildings go up. When prices come down, buildings tend to stay up. Until recently visitors to Dubai returned gasping. This was truly a city designed from start to finish by autocrats and architects. It was the last word in iconic overkill, a festival of egotism with humanity denied. It was an architectural chorus line of towers, each shouting louder and kicking higher. People were ants.

Dubai must have as many publicists as it has towers. Business and travel journalists in need of a freebie can just call. So, too, did a stage army of British writers who went to last month's Dubai International Festival of Literature, pretending to discover that it was not a free country (and practises censorship) only after being installed in their luxury rooms. A "tower of Babel" of a place "with neither charm nor character", declared an ungrateful Germaine Greer.

Even as the property market turned sour last autumn, the vast Atlantis hotel, built for $1.5bn with a whale shark in its swimming pool, was spending $20m on its launch party. Yet still the supplements and television contra-deals spluttered their superlatives - recently from a near-hysterical Piers Morgan. Every time the builder of the tallest tower in the world, the monster of Burj Dubai, sees the local ruler, Sheikh Mohammed Al-Maktoum, he is told to add more storeys for fear someone else may build an even taller one.

The stockmarket is down 70% on 2005's level, and construction has ceased on half the unfinished towers that stretch out into the desert. Eighty per cent of the population of Dubai are passing migrants who are there, like gold-diggers of old, only for the cash. The cash is going and so are they, leaving expensive cars in the street and at the airport, many fleeing possible imprisonment for debt.

Consider, meanwhile, the city of Detroit. Here was another that rose on the shore of an inland sea, fuelled by the cult of hypermobility. With the implosion of the motor industry it has gone to seed. Houses are pictured boarded-up or selling for a dollar. Dogs roam empty streets. Wind howls through vacant shops. The unbelievable has come to pass. The love child of America's greatest postwar passion is preparing to die.

Detroit is part of a great country that has shown itself capable of rescuing even its rustbelt municipalities. But this depends on finding people who will live in a place from which most have fled. Luckily, much of Detroit is of low-rise plot housing that could be transformed at least into Bohemian neighbourhoods, like ruined New Orleans.

No such option is available to Dubai. It is the ultimate Corbusian city, rigid in format and old-fashioned in conception, based on the grids and set squares of super-planners, and on grand symbolic buildings rather than intimate streets. It cannot respond to demand and supply for land and property, let alone to the wishes of free citizens. Human scale is confined to the Las-Vegas style replicas of Florence and Venice adopted by hotels that realise guests will not come if slapped constantly in the face by modern architecture. One business that cannot afford inhumanity is a hotel.

Such cities are like the planned science settlements of Soviet Russia or the instant downtowns of American "metroplexes", in which people do as planners ordain. There are no visual surprises, no corners of privacy away from big brother or at least big car. Buildings are exclusive and architecturally defensive, like London's Barbican.

I can only imagine that Dubai will one day be seen as a punctuation mark on the architectural follies of the past half century. This off-the-shelf city state has been built on laundering the profits of oil, drugs, arms and western aid. Its sheikh was not a complete fool, like comparable African and Latin American autocrats. He realised that city states cannot live on one product alone, unless it is money. Since he had no oil, he would drill for money.

Mohammed Al-Maktoum's failing has been his belief that megalomania is best when done big. He built a giant port and a giant airport, a giant stock exchange, giant finance sector and giant shopping mall. Dubai is a monument to big-must-be-beautiful.

During the gold rush the prospectors came. But as the rush wanes, Dubai is believed to be nursing the world's biggest per-capita debt. It may have to be bailed out by its neighbouring Gulf states, whose more prudent attractions Dubai tried to outshine; indeed, the process has already begun.

Nothing can bail out a tower if there is nobody to live in it. It cannot be pulled down and Chipping Camden replicated on the spot. The same goes for thousands of villas and apartment blocks along the Gulf shore and on the artificial islands in the world's most boring sea. They will stand empty in the heat.

Most were bought as investments. The value of those investments has fallen an estimated 60% in just six months. If their emptiness reaches a tipping point where there are no neighbours, no shops, no services and no social life, they will decay, like downtown Detroit.

Smart money says Dubai could survive as the playground of India, even if the oil money of the Middle East moves back to more salubrious Europe. This depends on India failing to supply its own playground and, critically, on Dubai surviving what could be a Muslim backlash against its hesitantly hedonistic western lifestyle. Rivals such as Dohar, Abu Dhabi and Bahrain - especially as they are now bailing out Dubai - may welcome its swift return to the desert ecology.

Just as visitors to the Middle East see half-built, mostly abandoned concrete housing blocks and barracks littering the landscape of Syria and Jordan, so the towers of Dubai will become casualties not of human greed but of architectural folly. Their lifts and services, expensive to maintain, will collapse. Their colossal facades will shed glass. Sand will drift round their trunkless legs. Animals will inhabit their basements.

Thousands of residential properties, if occupied at all, will be squatted by a migratory poor, like the hotel towers of the Spanish littoral or Corbusier's blockhouses of Chandigarh in India. Refugees will colonise the camps where Indian workers have lived as they built Dubai. Gangs will seize the gated estates and random anarchy will rule the soulless boulevards.

If it is lucky Dubai will at least be a refuge from the political cataclysms that could engulf countries such as Pakistan, Iran, Iraq and Saudi Arabia. But mostly the dunes will reclaim the place. In centuries to come, tourists will share with Ozymandias the message: "Look on my works ye mighty and despair." With Shelley they will see how, "round the decay /Of that colossal wreck, boundless and bare /The lone and level sands stretch far away."

simon.jenkins@theguardian.com