Why I am asking this question: In a discussion whether de-criminalizing drugs will dry off the income basis of criminals and therefore massively reducing crime, somebody made the point that most of the countless criminals involved will simply switch to different criminal endeavours (like buglary, robbery, or kidnapping for ransom); he claimed that nearly no of the drug dealers and middlemen will say "oh, this isn't profitable anymore, lets learn programming and join an IT startup"
I am not sure what to make of this point, so to know what happened in the aftermath of the prohibition might give valuable insights. Of course people like Al Capone had 'free lodging' for the rest of their lives, but there must have been tens of thousands of people involved who needed an income afterwards. As they were humans, they surely tried to keep and increase the level of lifestyle and income they were used to. Did they compensate by switching the type of criminal business?
With searching askhistorians I only found a similiar question from a year ago which didn't receive any replies.
So a lot of economists of black markets have talked about how organized crime grows and diversifies. One important thing they note is how crime groups start with the easiest, most low-risk, high-profit activities, which is usually selling illegal drugs (including alcohol). First off, as a victimless crime, hardly anyone has any reason to report your activities to the police. Secondly, if there aren't yet any local dealers of illegal alcohol or drugs, then there's a huge untapped market where generous profits can be made.
After organizations are formed though, they "diversify" into other criminal activities. And oftentimes these are the kinds of activities that require a certain level of scale and criminal "infrastructure" to pull off. Any two-bit crook can peddle drugs, but doing kidnappings for ransom, protection rackets, gambling rings, etc. requires a level of sophisticated organization that has to come from somewhere, they don't spring up out of nothing.
So by the end of Prohibition, a lot of gangs and the Mafia had already done this. They'd expanded beyond just bootleg liquor to prostitution, illegal gambling, illegal pornography, protection rackets, embezzling from labor unions, etc. So when Prohibition ended and the legal alcohol brewers started business again, organized crime cartels lost some business, but they now had other businesses to fall back on. They did decline a bit, the "Golden Age" of the Mafia was back in the 1920s and they've never been as powerful or as profitable as they were since. Surely a lot of people who'd been involved "went straight" and no longer participated in organized crime, especially low-level people who'd only been peripherally involved in crime. The kind of people who were lookouts, the drivers and keepers of secret caches of liquor, dirty accountants, etc.