The Bubble and the Shadows of the Economy — Land-Sharking and Bad Debt

In the previous episode, we saw how conflicts between organizations drew in uninvolved citizens, and how that anxiety and backlash moved society toward stricter enforcement. Just as the public eye was growing harsher, the Japanese economy was heading in an entirely different direction — toward a boom it had never known.

It was the latter half of the 1980s, the era of what came to be called the bubble, when the prices of land and stocks rose without limit. Amid this unprecedented torrent of money, the underworld drew closest of all to the heart of the economy. And after the collapse, that very closeness left a heavy price upon society as a whole.

This episode, too, is not meant to instruct in the methods of earning. Why, and how, did the economy and violence draw close, and what did it bring to society — I want to read it as a structure, from the perspective of institutions, money, and enforcement.

Soaring Land Prices and the Pressure of ‘Land-Sharking’

In the bubble period, what rose in value most fiercely was land. The Cabinet Office’s economic white papers and the like record that land prices rose substantially and continuously during this time. Land rose in value simply by being held, and reselling it yielded a profit on the difference — such expectations spread across society as a whole.

What arose here was the movement known as ‘land-sharking’ (jiage). For the sake of redevelopment, if the plots of a given block were combined into one, it could be sold as a property of far greater value. But if even one person who owned a small plot within that block refused to sell, the plan could not go forward. And so a role was demanded: to press the owners to clear out.

The problem was that there were cases in which violent means were used in that pressure. According to Wikipedia and research materials, some antisocial forces tied to real estate operators became involved in land-sharking and pressed landlords and residents to clear out through means such as intimidation and harassment. The research of the sociologist Peter Hill records that the reward for such land-sharking standardly amounted to a few percent of the inflated land price.

Here, too, we need to see the structure accurately. It was not that the crime groups alone drove up land prices. Finance that fanned the myth of land, loosened lending, operators rushing to redevelop — the underworld entered the gaps in the frenzy that the legal economy itself had produced, as ‘the dirty hands.’ The convergence of economy and violence was a structure that cannot be told as the responsibility of one side alone.

Put another way, the violence was outsourced. While the surface was a legal real estate transaction, only the final push — the moment of clearing out an owner who absolutely would not move — was entrusted to those who possessed violent means. The operator who did the deed directly evaded responsibility, and the underworld received its reward. From the standpoint of the residents who suffered the harm, it was hard even to see who the true client was. The line that should have been drawn between the legal and the illegal was conveniently blurred amid the boom.

The Stock Market, and the Underworld Edging Closer

It was not only real estate that the underworld drew near. The ever-rising stock market, too, became a destination for the money of the underworld.

The research of Peter Hill and others points out that in the 1980s, within the economic activity of the underworld, involvement in speculative real estate dealings and the stock market bubble increased. The corporate racketeers we saw in earlier episodes kept their influence in the gap between companies and their shareholder meetings. The more the money moving in the boom swelled, the more the room to parasitize around it widened as well.

In this way, the boundary between the legal and the illegal, the surface economy and the underground economy, grew more blurred than ever amid the bubble. The story of rising value, which everyone believed in, widened the room for violence to intervene — that was the shadowed part of this era.

The Other Spoils the Collapse Gave Birth To

As the 1990s began, the bubble collapsed. Land and stock prices plunged, and the land that was supposed to keep rising fell far below the price at which it had been bought. Companies and individuals who had borrowed to buy real estate were left holding only the loans they could not repay.

What arose here was a vast mass of bad debt. According to Ministry of Finance materials, the banking sector carried a serious bad-debt problem throughout the 1990s after the bubble’s collapse, and its scale ran to enormous sums. A mountain of loans that would not be repaid weighed long and heavily upon the Japanese economy.

And into this new phase — the settlement of the bad debt — the underworld became involved once again. Even when one tried to recover the land or buildings that had served as collateral, if there were those who sat tight there and demanded a high sum to clear out, the settlement could not proceed. According to research and reporting, antisocial forces became involved in the occupation of such collateralized real estate and at the scenes of debt collection, and cases of obstructing the normal settlement became a problem. It was against such movements that bar associations and others worked on countermeasures, calling it ‘civil intervention violence.’

When we look back on this era, what we want to avoid are two extremes. One is to exaggerate the underworld as ‘the rulers of darkness’ and attribute all the economy’s turmoil to it. The other, conversely, is to treat its involvement as though it never happened and speak only of the responsibility of the legal economy. What actually occurred was a chain: an overheated economy made gaps for violence to enter, violence turned those gaps into profit, and after the collapse even the cleanup became spoils for the underworld.

Many parts remain where the assessment cannot be fully fixed, and it is difficult to portray the full picture of the harm accurately in numbers. That is precisely why there is meaning in tracing the structure within the bounds of what has been publicly confirmed. What is certain is the fact that through the bubble and its collapse, the economy and the crime groups became entangled more deeply than ever, and that closeness left a heavy burden upon both citizens and the economy as a whole.

When the shadows of the economy had grown this deep, cracking down on individual incidents alone could no longer keep up. A new mechanism — to regulate the organizations themselves head-on — came to be demanded. At the point where the citizens’ anxiety we saw in the previous episode and these shadows of the economy converged, the state at last set out on a full-scale counterattack. In the next episode, let us look upon the Anti-Organized Crime Law that became its turning point.