In layman’s terms, the Yakuza are Japanese equivalent of the American mafia. The Yakuza stems from deep Japanese origins of the lowest social groups of gamblers and drug peddlers. What started out as a tryst to raise their social status has now turned into something much bigger and uncontrollable.

The economic standing of the Yakuza in the history of Japan cannot be denied, even in the late 19th century which was seen as the era of predominance of the merchant class, the society saw them as a bunch of misfit traders peddling fake or shoddy goods to extort customers. They were the backdoor traders providing the economy with goods nobody dared to. In custom and tradition rich Japan, the society need not always see the Yakuza as all bad. Consider this scenario: End of World War-II; Japan has had a humiliating defeat and all the soldiers have returned home to a war ravaged economy. There are no jobs and the Yakuza steps in to provide jobs to all the soldiers and a home to the social misfits.

How can you call that a societal evil?

Unlike the mafia, the Yakuza have transformed themselves from a criminal group that deals only in illegal activities, into a deep rooted business conglomerate, the catch being that upon noticing the fine print, we realize that a lot of these businesses have some tie to the underground. These ties can be wholly owned by the Yakuza or can be hired to keep the board meetings short and sweet.

The Yakuza have their hands in a lot of jars; the real estate, manufacturing, construction, banking, finance etc. A lot of economists consider the Yakuza to be solely responsible for the plummet of the Japanese economy. Let’s look at an analogy: Gears in the transmission of a vehicle is apt. All gears are equally important. If any one of them fails, the car would fail to operate. The same seems to have happened with Japan. Although it’s still contestable whether that gear was in fact the Yakuza. As surprising as it is, no one seemed to question them. Everyone who mattered was either in bed with them or feared for their lives too much to do so.

To reminisce a little, the period of 1985-1990 was a time of unparalleled economic prosperity for the nation. This was also filled with opulence and extravagance This bubble economy kicked off in 1985 on the signing of the Plaza Accord which called for the depreciation of the Dollar against the Yen. It was aimed at making the US exports cheaper to the resource poor nation. Alongside this, it also made it cheaper to purchase foreign assets and Japan went on a shopping spree.


Soon the economy was bubbling with progress and corruption. With the growth of the economy came the complementary growth of the Yakuza. As of late 20th century, they were already lending too much at low interest rates and influencing the economic factors too much. Criminal elements soon stripped away the banking, real estate and finance sector, reducing competition in all three.

Japanese banks, which had previously lent mostly to corporations, now had ample funds to lend at a time when their major corporate customers were flush with cash, thanks to their trade surpluses and availability of worldwide equity markets. So the banks began freely lending to Japanese firms and individuals, who purchased real estate, which increased the paper value of land assets. This created a vicious cycle in which land was used as collateral to obtain further loans which were used to speculate on the stock market or to purchase more land. This drove up the paper value of land further, while the banks continued to grant loans on overvalued land as collateral. There was little questioning on how the loans would be repaid once the land values started dropping. Following this, was a slump that the nation never really recovered from.


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