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April 18, 2007

The Story of the Black Corporation

The State had lost the war, and international pressure forced the State to abolish a few recreational services like prostitution and amphetamines that had previously been legal.

The Black Corporation, Ltd. essentially took over these markets with tacit government approval, and in order to carry out its extra-legal mandate, BlackCorp had implicitly attained the right to ignore all of the laws that the State had created for its companies and citizens. Working outside of society, the Black Corporation needed its own security services and built up a small private army complete with firearms. The State was sometimes weary of this arrangement, but when the State had problems with rioting youth and anti-State protests, the State knew they could call upon the Black Corporation to provide manpower to squash the rebellion. The Head of State and some of the Directors of the Black Corporation Board knew each other in their youth and arrangements were easily made.

Eventually, the Black Corporation realized that it did not have to solely operate in shadow businesses. Actually, with the threat of violence, they could charge high prices for totally uncompetitive services and products and vendors would have no choice but to participate in the transaction. Despite no interest in pursuing innovation or superior performance, the Black Corporation was guaranteed payment on almost all public works projects through their large share of the construction industry. The Black Corporation even had subsidiary organizations that controlled the art, music, and entertainment worlds that boomed from the 1980s. In whatever field you looked, there would be a subsidiary of the Black Corporation involved at some level.

BlackCorp also decided to form business alliances with similar organizations around the country, buying some out forthright and leaving others to pay yearly management fees to the central office.

In order to maintain a political presence, BlackCorp would align, back, and partially staff a political wing of extremist activists who would intimidate and threaten those with anti-State views or the kind of liberal ideology that opposed the existence of the Black Corporation. By being determined "stewards of the State" and financial beneficiaries of the Party, Black Corporation made sure the State would never push to break up their business activity.

One day, an executive of the Black Corporation's local subsidiaries - Water Heart Co., Ltd. - gunned down a local mayor. As far as we could speculate, the mayor had not given beneficial business terms to Water Heart. The police opened an investigation into the executive as an individual actor, but Water Heart was untouched as an organization. And it goes without saying that the central offices of BlackCorp were in no fear of being shut down. "We cannot be responsible for all the actions of our subsidiaries."

Threats of violence are both the reason behind Black Corporation's success and the ultimate products they supply to society, and yet, the State feigns surprise when BlackCorp goes through with the violence that is fundamental to its existence. Now why would the State not go ahead and shut down Black Corporation when clearly the Black Corporation has overstepped their mandate? The State's inaction in eradicating the Black Corporation almost appears to suggest that the State needs this violence or the threat of violence. Or maybe the Party that has run the State since its recent formation needs the services of an organization with the ability to circumvent its own laws.

The executive from Water Heart will be punished as an individual, and the State will go back to accepting a "peaceful" co-existence of Black Corporation - ultimately, a huge unproductive conglomerate with monopoly power that has a founding mandate of working outside of the legal system. And when the next politician or writer or business leader gets attacked by the Black Corporation for not agreeing to appropriate transactional terms, the perpetrator will be punished. But they will never dismantle his employer.

Posted by marxy at April 18, 2007 3:10 PM

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Comments

"But they will never dismantle his employer."
Not this time.This,along with the turf war in the very center of Tokyo in February really made everyone in Nagatacho and Sakuradamon mad as hell.Time to dismantle Yamaguchi-gumi is the talk of the town.It may not be the over all annihilation,but this time they hit the mayor of the prefectual capitol during eletion week.No excuse what's so ever.Some kind of segmentation is unavoidable.

Usually human rights groups and left wing papers like Asahi are reluctant to have power to the authority to fight against organized crime such as tapping and sting operation,thus become strange bedfellows with the yakuzas.Not anymore.Attack on LDP politician Kato Koichi's home and ex-diplomat and top negotiator with Pyongyang Tanaka Hitoshi had made liberals worried.Added to that the Conservatives are also concerning Chinese spy case on MSDF and TOYOTA related DENSO that uncovers large scale aggressive espionage ongoing.The right is also concerning Japan is way behind in legal and institutional development to fight the war on terror.So there is a concensus for stronger secutiry force here.
I predict the moment of truth is coming with in the couple months.

Posted by: Aceface at April 18, 2007 8:49 PM

I'm always surprised at the watered-down vocabulary most politicians use when condemning what goes on. Some of it approaches "on the balance, this is a bad thing" compared to the voices I heard from the teevee growing up. This phenomenon doesn't seem to be limited to issues concerning the local money lenders either.
They don't usually hold back when advocating, but they break out big bottles of enryou when it's time to talk about domestic problems of any kind.

Posted by: nate at April 18, 2007 9:40 PM

I'm curious, what is your bone to pick with the Yakuza?

All human societies have some level of organized crime. This will be true as long as minority groups are discriminated against and don't have the opportunities as others in society. The Yakuza has been active in Japan for centuries longer than the post-war Japanese government...

Posted by: neb at April 19, 2007 8:15 AM

[...The Black Corporation, Ltd. essentially took over these markets with tacit government approval...]

A red herring. One doesnt need government approval, tacit or otherwise, to take over black markets. Of course the notion of tacit approval sustains a grand conspiratorial narrative but really, black markets, by their very nature, invite black corporations. The criminalization of certain activities is inherently an invitation to underground operatives.
On another note, as Japan seeks a greater international presence, a move against organized crime may become even more neccesary: International crises tend to pay off rather handsomely for Governments - they justify an increase in State power.

Posted by: Chuckles at April 19, 2007 9:21 AM

"One doesnt need government approval, tacit or otherwise, to take over black markets."

Except as far as I know, there was a deal made early on to basically overlook the shabu market as long as the yakuza never got into heroin, cocaine, marijuana, and the other "Western" drugs. The whimper of resistance against yakuza penetration into the normal economy over the last 60 years looks a lot like either tacit approval or total negligence - and the CIA/LDP connection points to the former.


Honestly, most of the major crime syndicates would never have had been able to attain such stature in the post-50s if it hadn't been for the CIA using them in their struggles against Communism.

"Time to dismantle Yamaguchi-gumi is the talk of the town."

The cancer is now part of the host. Good luck with the treatment.

"This will be true as long as minority groups are discriminated against and don't have the opportunities as others in society. The Yakuza has been active in Japan for centuries longer than the post-war Japanese government..."

Modern-day yakuza and "pre-war" yakuza are totally different beasts. I think my problem is that you have this enormously inefficient and violent economic force in society that not only drags on social progress but funds right-wing terrorist operations. They are not just the tattoo'd guys working your local matsuri stand - they are embedded in too many "normal" industries to name and have the Reverse Midas Touch on everything they work on. They're bad for democracy, and they are bullies in an otherwise peaceful society.

"On another note, as Japan seeks a greater international presence, a move against organized crime may become even more neccesary:"

For better or worse, global capitalism is going to seriously challenge the yakuza. Foreign shareholders won't put up with it and the pinkyless inefficiencies will be exposed and punished.

Posted by: marxy at April 19, 2007 11:11 AM

[...the CIA/LDP connection points to the former...]

Do you think this deal counts for much in the long run? Your narrative looks like a page from the US drug wars. Is it possible for the State to claim to overlook something that it cannot feasibly control in the long run? A lot also was made of CIA/Drug connections in the USA. Does it make sense to grant one partner in a symbiotic relationship a fiat that it doesnt have? Look at the American occupation and Opium Lords in Afghanistan. Opium production is back in force. Does it make sense to claim that America is overlooking this? In the context of larger objectives, the occupation has *no choice*.

[...global capitalism is going to seriously challenge the yakuza. Foreign shareholders won't put up with it...]

True dat. Tho' I wonder how exactly this will work if the Yakuza/LDP symbiosis exists in reality. From what I know of emerging markets (not that Japan is exactly one) where informal power structures exist, foreign capital simply follows the path of least resistance. I mean, foreign capital hasnt had any problem dealing with informal power structures in the form of gangs and warlords when extracting Tantalite from the Congo, or Oil from Sudan. In Japan, what is the path of least resistance? Perhaps Yakuza run business might actually become efficient market players. I dont think we ought to assume that market dictates will flush out the criminals and their associates. It might end up reforming them and making them better players on the global scene - however, on the local scene, they might still wield a fair amount of power. See Italy for instance. Many would say Berlusconi is basically a crook. Look at the oligarchs in Russia - some of them with connections to crime. Did foreign capital have any problems with them?

Posted by: Chuckles at April 19, 2007 11:33 AM

"A lot also was made of CIA/Drug connections in the USA"

The CIA systematically worked against the DEA's mission, and obviously, national security had a great preference. Same goes with your local right-wing thugs - they sling some speed, but hey, at least they keep the Left in check.

"I dont think we ought to assume that market dictates will flush out the criminals and their associates."

The yakuza strike me as particularly lazy. You can be an active crook - maybe like Horie - but the yakuza have been insulated from the pressures of economic competition until recently. And they're not so good at recruiting new talent. I don't think they've got many core competencies.

Posted by: marxy at April 19, 2007 11:38 AM

Hmm. It seems that you do think globalization will flush out the Yakuza. Yet, in every country where I find a parrallel or near parrallel situation the reverse has been the case. Care to provide evidence from any country where foreign capital ended up dismantling informal power structures that resemble the Yakuza?

Posted by: Chuckles at April 19, 2007 11:46 AM

Your examples first.

Posted by: marxy at April 19, 2007 3:28 PM

Okay. Two examples:
Congo and Russia.

First, I show that these places have much in commmon with Japan when it comes to organized crime (by your own analysis). 1.) A state sector heavily reliant on informal power structures diffused through mostly criminal operatives. 2.) Criminal operatives running illegitimate and legitimate business for their own benefit and for the benefit of State officers. 3.) The general market incompetence of said criminal operatives 4.) A relationship with foreign capital.

Do Congo and Russia meet these requirements? Yes.
Has foreign capital ended up exposing, punishing and reforming crime/business symbiosis in Russia and Congo? No. It has further entrenched it.

In the case of the Congo, we have a State sector that relies on warlords and their urchins to secure physical access to territory and mine locations. Legitimate investors, both domestic and foreign are either harrased, intimidated or killed. Local politicians suffer the same fate when they oppose crime/business interests. Congo has long attracted foreign capital: Leopold had his base here and ore and timber interests were pretty much well represented. The mobile phone revolution spurred intense interest in coltan for which Congo is the worlds major supplier. Access to Coltan is controlled by a state/crime/business triad of actors. The services provided by this triad are probably not as efficient as those to be had on an open market: Liberal market ideology would suggest free and fair bidding for contracts, decent infrastucture and personnel safety. The triad provides the exact opposite. Yet - what has been the effect on Foreign Capital? It further entrenched the warlords leading up to the latest conflict several years ago. A conflict which foreign capital, aligned with foreign governments wisely overlooked. See: Tim Raeymaekers; Network War. An Introduction to Congos Privatised War Economy.

Russia: Again, a triad of State/Crime/Business can be discerned; especially more pronounced in effect since glasnost and perestroika. Much the same can be said of the Oligarchs: They have very few core competencies, arent particularly innovative, they dont invent anything and came to power, much like post war Yakuza, by capitalizing on Western blase. Just like the Yakuza moved into vacua created by the clientization of the Japanese state, the Oligarchs and their criminal friends moved into vacua created by Russias partial economic clientization, courtesy shock therapy and others. But the triad operates again, like the Yakuza via rent seeking behavior and control of access - to valuable government properties snapped up in the early nineties during mass attempts to privatize and get citizens to embrace an ownership culture.
Foreign Capital steps in and what do we get? Are the criminals and oligarchs exposed and punished? No. They become further entrenched with prestigious and high profile Western business interests rushing in deal. In fact, this entrenchment leads to domestic capital flight from Russia, even as FDI *increases.*
See: The Scary Business of Russia, Vladimir Kvint, Forbes. 05/23/05. Also see: A macroeconomic model of Russian transition:The role of oligarchic property rights by Serguey Braguinsky and Roger Myerson

The Braguinsky and Myerson paper argues that oligarchic models under certain circumstances might aid transition to a more liberal looking market economy, which however, still retains the oligarchs as players.

I anticipate some objections to these case studies:
1. That Congo and Russia look nothing like Japan, which has a relatively stable government and a generally prosperous society.
2. The relationship between the West and Japan differs from the 2 case studies.

My preemptive response is that these objections do not offer a reason why the basic actors - a State/Crime/Business triad, which we hold to be generally independent of surrounding social structure should interact with foreign capital any differently. My view is that in this case the vagaries of Japanese culture and society and its history with the West are less important than the nature of the actors in question: I hold that anywhere in the world, these actors will interact in pretty much a uniform fashion.


Posted by: Chuckles at April 20, 2007 3:42 AM

I have had fairly intimate relationships with a few dozen yakuza 'gangsters' in my life, and I can tell you are speaking from a position not grounded entirely in reality. Most of them are simply looking for ways to keep themselves and their families fed. They work mostly with victimless crimes, and rarely resort to violence.

The realities of the guys on the street and the picture you paint of the vast criminal conspiracy don't quite sync up. However, I think it is safe to say (especially in light of the recent nagasaki shooting) that the syndicates have more real power than the politicians and the politicians fear violent backlash if they were to condem organized crime. Thus, the status quo is not likely to change anytime soon...

Posted by: neb at April 20, 2007 7:05 AM

I agree with neb 100%.
Although I still think Yamaguchi-gumi had crossed the rubicon.
The rise of the YG had a lot to do with tighter legal regulation by the police and economic recession in the 90's.All the small clans gathered under one big tree to survive the harsh environment and that was Yamaguchi gumi.YG simply gave too much ranking posts to those who are uncapable to lead the clan.These guys becoming ranking boss were unimaginable in the past but YG gave these post as sort of bait to have them joining the alliances.Police allowed them to avoid small scale turf war between the clans elsewhere.So there was Pax Yamaguchica situation in underworld in the 90's.This probably made many Yakuza boss detouched from realities for they didn't need to face competition as their predecessor.That is my speculation on why we have lame boss, stupid enough to shoot a politician in the middle of the election week.That,along with the overstretched criminal empire would be the target for police intruisions.Not that mean the end of Yamaguchi-gumi or Yakuza it self.but it has to down size to keep the business back in the track.

This may not be directly related,however I think is crucial for yakuza in Nagasaki,that Nagasaki is the only prefecture in the country where local congress abolished soapland and other sex shops.Because Nagasaki has been known for largest concentration of the Roman Catholic in Japan(could now be outnumbered by Shizuoka with all the Brazillians there)with Church enforcing non-Japanese anti-erotic ethics to the local society,men simply have to go to nearby Saga to enjoy commercial sexual expertise.(or that was what it was according the taxi driver when I went there in 96.)
Lack of sex industry undoubtly made yakuza more dependent on public enterprise works.Recent Koizumi led reform had cut down more public construction work related budget which presumably gave a big smack to the already beaten local economy.
That would give some light for those who don't see the motivation of the Yakuza boss himself become hitman on this murder.

Posted by: Aceface at April 20, 2007 10:26 AM

"Most of them are simply looking for ways to keep themselves and their families fed."

If you are in the mob, 95% of your work is involved in some non-victimless crime (whether or not you think selling drugs is as diabolical as often portrayed, there is a lot of violence that surrounds the trade itself). Even without violence, daily work is based on exploitation, intimidation, extortion, etc.

And if you are working some pedestrian job in a "yakuza real estate agency," you can also probably work in a normal real estate agency. And pay taxes. The idea that you "have to" be in the mob is ridiculous and quite insulting to the majority of people in the same income group who decide to abide by laws and not take home a wad of blood money every month.

"That is my speculation on why we have lame boss, stupid enough to shoot a politician in the middle of the election week."

It's only stupid if the government and police actually do something. This will quiet down and the status quo will return. So goes Water Heart Co., Ltd. but surely those guys will reform as a new organization or get absorbed into their "rival" gang.

Posted by: marxy at April 20, 2007 11:20 AM

For whatever reason, this was the worst written article I have read by Marxy in a looong time. Fix up.

Posted by: Bob at April 20, 2007 3:46 PM

"this was the worst written article I have read by Marxy in a looong time."

He says "written article" to make sure the new MXUT doesn't steal the "worst" award.

Posted by: marxy at April 20, 2007 4:35 PM

Hey, I'm all for snippets of 8bit video game themes...

Posted by: Bob at April 20, 2007 6:34 PM

http://www.japantoday.com/jp/news/404460

What is up with these guys this week?

Posted by: marxy at April 20, 2007 7:20 PM

Thinking about Chuckles' excellent Congo/Russia/Japan comparison, the first thing that springs to my mind is the distinction between primary, secondary, and tertiary industry. Is there any correlation there with type or strength of organized criminals/warlords/other "illegitimate" actors in economies seen from this particular development perspective?

Posted by: Brown at April 20, 2007 8:51 PM

Aceface, your info is priceless, as always! Very ineteresting about the fine details of Nagasaki politics/culture. Well, here's my libertarian proposal- so naive I feel silly typing it- to get rid of the mob in an instant: (re-)legalize drugs and prostitution! I know, I know, it'll never happen... Of course, it's the same in Afghanistan: http://www.slate.com/id/2110987/

Posted by: Brown at April 20, 2007 10:14 PM

[...the first thing that springs to my mind is the distinction between primary, secondary, and tertiary industry. Is there any correlation there with type or strength...]

I certainly dont see any distinction; which is why I classed Congo and Russia together. As you see, operations in the Congo are primary, and in Russia they are secondary. My own view is that regardless of the kind of industry, in pretty much every society, state/crime/business will act pretty much uniformly, WRT capital. It is pretty obvious then that I dont think the type of organized crime really matters much - i.e. warlords versus mafioso or yakuza - strength, perhaps, yes: But ultimately, in line with what Marxy was arguing, the strength of these organizations derives from niche they occupy due to State withdrawal - I dont think approval is neccessary for this sort of thing: I think such markets by their nature are their own power.

Posted by: Chuckles at April 21, 2007 10:29 AM

Prostitution was legal in Japan back in the days.And few mobs were involved in managing the brothels.Kenji Mizoguchi's last movie called "Red Light District赤線地帯”does cover the vivid description of the "public brothel公娼宿".
The thing is it was the pressure from the feminists that ended the long tradition of the brothels in Tokyo that goes back in the Edo era.
So it is politically difficult to turn the clock back,because as I understand many legalized red light district in the Netherland,Germany and Australia are supported by the feminist group(for the presence of the safety measure for the women working there)But for above reason Japanese feminist would be very reluctant to support a policy that would contradict their past objective.For the german and the dutch brothels as I trust the media report,they are now filled with more foreign prostitutes than the locals.
If we start same kind of establishment here in Japan,we would definitely have many Korean,Chinese and Phillipino working for the establishment.The critics would automatically label such institution as "Modern day Comfort station".

Posted by: Aceface at April 22, 2007 4:00 AM

"If we start same kind of establishment here in Japan,we would definitely have many Korean,Chinese and Phillipino working for the establishment."

But aren't their many such people working for brothels right now, under highly precarious, dangerous, exploitative, and "illegal" conditions (i.e. in addition to other means of intimidation, their pimps can use their very illegality against them)? At least if it were legal, these establishments could be held to some kind of standards. Not that they actually would be, mind you- I have near zero confidence in the State (especially this one) to look out for the working conditions of laborers of any kind, be they salarymen, hostesses, or even yakuza.

"The critics would automatically label such institution as "Modern day Comfort station"."

Well, and they'd be exactly right. Which is why the State would need to act to reduce the demand for such services, which, I think, is intimately tied to the way "legitimate" businesses operate (i.e. taking all the male employees out for a round of bonding blowjobs with the boss after work, or at least just keeping them away from home for such long hours that they never have time to bond with their spouses). Individual workers really cannot opt out of such practices short of leaving their company or accepting a demotion (just as individual workers have a hard time opting out of anything), so again, you'd need the State to step in and do something, but again, I have perishingly little confidence they'd do that.

I guess I'm imagining that these things could be accomplished by some kind of sex-positive-feminist/labor government, but I won't hold my breath waiting for anything of the kind. I know it's just a fantasy, sadly.

Posted by: Brown at April 22, 2007 8:54 AM

Chuckles, if primary/secondary/tertiary is not the variable that accounts for the comparative strength of "illegitimate" actors in an economy, what, I wonder, is?

Or perhaps it's a dead end or obfuscation to try to distinguish between "legitimate" and "illegitmate" actors in an economy anyway (I'm thinking here of Galbraith's reminder not to put too much importance on the distinction between public and private sectors, as they operate hand-in-hand in many cases)? For example, the CP/State are acknowledged as "legitimate" actors in the Chinese economy, and they take care of a lot of things that would be the work of warlords or mafia in other economies (i.e. controlling the work class through violence and intimidation).

Posted by: Brown at April 22, 2007 9:08 AM

Though I have no disrespect for either job category, I should perhaps say that didn't mean to conflate hostesses with prostitutes (though I'm also well aware of the potential category overlap)...

Posted by: Brown at April 22, 2007 9:41 AM