It's a life experience for Marty in seeing just who his friends are as he debates what to do in killing Ram-Rod that if caught could but him behind bars for the next 20 years. But in the end he chickens out and does the right thing in not killing Ram-Rod who in fact killed his best friend Little Pancho in cold blood. It's Packy who does the job on him and in return ends up paying for it.
As for Marty he finally sees the light in what being a gang member is and quits the Flaying Dragons as well as the self-centered Lucy the girl that he's in love with who turned her back on him when he really needed her. Now with a clean slate or record and a new start in life he can go back to his job in the garment center as a cloths pusher and leave the gang violence far far behind him.