The second and the most preferred theory by present day yakuza themselves is that their ancestors were the machi yakko, servents of the town. Although little evidence shows the tie between the two, these were folk heroes that were regular peasants who put matters into their own hands to take a stand against destructive kabuki monos for the well being of their family and friends. Their heroic actions against far superiorly trained samurais were in some ways viewed as England's Robin Hood counterpart. Like the modern day yakuza they had a strong bond between "members" and spent most of their spare time gambling. The machi yakko "...were the predecessors of the modern day yakuza, and while the connection may lie in legend only, the machi-yokku play a large role in the [manifestation of the] romantic image the yakuza gangster holds today."
(http://altman.casimirinstitute.net/yakuza.html)
With the early half of the 1700 spent on setting up a legitimate police force to put down the kabuki mono, the modern yakuza comes to surface in latter half of the 1700 century as bakuto (gambler) and tekiya (peddlers). The bakuto provided borderline legal services such as gambling, private protection, and prostitution. The Tokugawa allegedly accepted these arrangements because they preferred these underground businesses in the hands of an organized and competent distributor. As outlaws of society, they operated alongside Japanese towns and highways engaging in daring gambles with passing by customers. Above all, the
bakuto enjoyed playing traditional games such as dice, hanafuda, and oicho-kabu. The word yakuza received its names from the worst possible hand combination in oichokabu, (a game equivalent to blackjack) priding themselves to be no good to anyone and a menace to society. One of the most iconic looks of the yakuza are their elaborate full body tattoos that were said to be embraced during this time when the bakuto carved their skins to create beautiful engravings. As large groups of them gathered together they would at times organized themselves into groups to operate activities such as loan sharking.
In contrary to the illegal business of the bakuto, the tekiya were by definition legal, yet they often times engaged in illegal vending, distributing contraband goods across the countryside. They had a shady reputation for selling faulty goods and their means of selling were typically deceptive. It was with the tekiya that they created the relation of oyabun-kobun (father role and child role), a strict code laid down by the gang to obey the hierarchy, that remains a prominent feature of the yakuza culture today. The members at the bottom are to strictly obey the orders or the oyabun and it needed were to be ther bosses' teppoudama (rifle bullet) terminating their target. Marked as the lowest of society, discriminated as scums, both the tekiya and the bakuto had a lot in common. Regarding this, it isn't too hard to understand why they joined hands to emerge as the undisputed lords of Japan's underworld; the misfits' match made in hell was the start of a seemingly endless partnership that would go on to change the face of Japanese organized crime.
The bakuto and tekiya would go on to take over Japan's underworld and on the eve of the twentieth century they were pretty much the modern yakuza we know today. Nonetheless they were still deemed as criminals and the yakuza's expansion got to a point where the police had conducted a severe crackdown and their numbers were stagnated. However fate decides to side with them and the world's most obnoxious war breaks out in 1941 culminating in the rebirth of the yakuza.
Crawling out of Tokyo's chaotic ashes, "lucrative business opportunities arose, [and] the yakuza begin their rise to prominence." Having a martial law placed in the country, tokyo burned down, medical supply prices unreachable to everyone in the country, all hell was bound to break loose. "A black market of unparalleled size is opened by the tekiya, funnelling military supplies from both armies to the people. Gigantic stores of amphetamines, used as combat drugs during the war, keep minds off the hunger." The United States occupational government, unable to handle the anarchic manifestation of the yakuza turn a blind eye while they conquer the underworld. Whenever a corrupted US officer was in need for services not offered in legitimate businesses, the yakuza were always there to provide for someone with a deep pocket. During the post-war years the yakuza develop a new faction of yakuzas, adding on to the bakuto and tekiya, naming themselves gurentai(violence gang). The gurentai were thugs hired by the highest bidders to counteract socialist unions, on order from influential right-wing politicians. The three unofficial sects merge as one and the yakuza crime syndicate is conceived.
One name comes forth when discussing this dog eat dog multibillionaire business, Yoshio Kodama was the Al Capone counterpart of the in the sixties. He earned billions from anything he could make money off whether it was drugs or "construction kickback schemes." Kodama brought peace to the warring clans and united them under him, much like the Tokugawa reign. The renewed Japanese government having been closely associated since the formation are forced to rely on matters the government chose to sweep it under the rug. The yakuza, with all the right prices will virtually provide you with anything or assassinate ones at times. The Japanese right wing government gave the yakuza kumicho money and in return the yakuza will take care of things corrupt politicians don't want on their records. In the seventies yakuza members count were at an all time high while crime rates hit an all time low; everyone knew the consequences stealing or interfering with a yakuza clan. During the mid seventies zaibatsu, the government, and the yakuza reached a mutual understanding. They were the ones who controlled the real cash flow of Japanese economy. Their understanding was, "...[m]oney flows in all directions, and the trinity is complete. People, government and organised crime all rely on one another to function." Three entities, sharing perks and bending the rules , because after-all they are the ones making the rules. The yakuza are virtually unstoppable, their connections amongst the conservative legislators are far too well situated to be removed by some bills being passed.
The yakuza has always been an eminent part of Japanese society not always for the better but certainly and integral part of Japanese politics. Unlike all other criminal organizations that battle to lurk in the dark, the yakuza certainly don't hassle over it. Not another single criminal organization managed to make such deep impact in a government so subdued by a stable government that it can legally introduce the kumicho(supreme boss) on national television discussing why the yakuza won't fade in this country (http://www.youtube.com/watch?v=9e65hdtYtio). Plus, the fact that the yakuza being the single largest criminal entity in the world, in a country slightly smaller than the state of California, has one of the world's lowest violent crime rates in the first word is just staggering. Given this huge population that it is not under the rule of countries’ rules, a set of rules and or a set custom is needed to keep this 80,000 strong organization functional and in order. In recent years "Japanese government recently pledged to crack down[on the yakuza], reversing a longstanding policy of tolerating the Yakuza. However, the yakuza syndicates enjoy extensive influence in the business community, and the Yamaguchi-gumi has ties to some of Japan's biggest companies, including Olympus and TEPCO. The Yamaguchi-gumi also is an important backer of the Democratic Party of Japan, which heads the government's ruling coalition." We know it works, as we see them run itself every single aspect. The yakuza claims they are part of something bigger then themselves, and this helps them live strictly by a code. The structure of the yakuza are simple and their members very homogenous. All members are Japanese males. Their codes of bushido that represents honour and respect guided the yakuza to stay loyal to their masters even during police "crackdown" years, and the organization will survive very far in the future.