The midfielder says Fernando Torres will soon follow Mascherano to the Nou Camp.
"Being brutally honest they haven't brought any top-class players in to replace the ones they have sold.
"They haven't tried to improve the squad. Nando deserves to be playing with the best players like he does with Spain.
"If Liverpool have another disappointing season that will be it for him."
If the striker were to leave, Xavi has no doubts about where he would choose to move to.
"It would cost a lot to bring both Cesc and Nando to the club - but it would be worth it and, in my opinion, make us virtually unstoppable."
Xavi has played for Barcelona his entire career - with over 500 appearances - as well as 95 Spain caps.
He has five La Liga titles and two Champions Leagues to his name and added: "It was public knowledge we had made a bid for Mascherano.
"The player's family was unhappy in England. There was no point trying to keep him."