You are who you imprison. Well, that’s what Plato would’ve said if he would’ve written The Republic in the modern era. Actually maybe not, but he would’ve been able to see the connection between modern economics, legislation and imprisonment. Being the genius that he was he’d probably devise a theory about this correlation, it’d be lofty, and well articulated. But since he’s no longer with us you’ll have to settle for my condensed version.
The first aggressive and transparent instances of this correlation emerge around the age of Mercantilism. They would debut in the form of legislative mandates all across Europe, particularly the Anglo-sphere. Michele Foucault (Historian and author of Madness and Civlisation) argues and points out that during this period:
“The first houses of corrections were opened in England during a full economic recession. The act of 1610 recommended only certain mills and weaving & carding shops to all houses of correction in order to occupy the pensioners. But what had been a moral requirement became an economic tactic when commerce and industry recovered after 1651, the economic situation having been re-established by the Navigation act and the lowering of the discount rate. All able-bodied manpower was to be used to the best advantage, that is, as cheaply as possible. When John Carey established his workhouse project in Bristol he ranked the need for work first: “the poor of both sexes…. May be employed in beating hemp,dressing and spinning flax, or in carding wool and cotton”…Sometimes there were even arrangements which permitted private entrepreneurs to utilize the manpower of the asylums for their own profit” (Madness and Civilisation 52-53) 
In a nutshell, Foucault emphasizes the interdependence between economics/legislation, and the effect they had on the development of correctional facilities in the age of Mercantilism. In this case an economic recession has hit England and in response the government passed legislation in order to regulate the economy. A fairly normal measure for governments trying to lessen the effects of an economic catastrophe. But it’s the methods that are deployed which raise cause for alarm.
In a desperate attempt to save the economy England outlawed abject poverty, homelessness, and “loose, idle and disordley behavior(the latter was never given a clear legal definition) . They sent all “offenders” to correctional facilities, where they were locked in a cell and forced to work . The proper terminology for this systemic means of punishment is called Poor Relief. It was a way for the government to absorb the “non productive” members of society into a system of regulated labor. That newly established labor pool was then used by the big businesses of the time to make a profit during the economic recession. These organizations would come into these ‘houses of correction’ and use the free prison labor enabling them to turn a profit during a recession. Basically they exploited the new source slave labor.
Additionally, Poor Relief should be looked at as a form of societal control in the face of economic hardship. By rounding up the impoverished of society, England was able to mask how catastrophic things were by forcing everyone to be economically productive. This enables a suppression of any societal/political agitation. After all people without jobs can’t protest the state of the economic climate if they’ve already been arrested for not having a job. That allowed England to ‘kill two birds with one stone’:( 1) because more of the population is able contribute to the economy (increasing economic efficiency) and (2 )the threat of civil unrest is suppressed. The first instances of modern mass incarceration have begun to take shape.
(in hindsight England was able to fully recover from their economic catastrophe)
Fast forward to the latter part of the 20th century. A time of extreme ideological tension across the globe. Perpetrated by an ongoing Cold War between two world superpowers, the USSR and the USA. During the Reagan administration the goal was clear; the Soviets had to be stopped. The administration would spend their time conducting extensive research to determine the Soviet’s systemic weaknesses. One of the weaknesses identified was an economic one. The administration figured out that by strangling the USSR with economic sanctions and making sure the US economy expanded at an exponential rate, the USA could win the Cold War. Rendering the Soviet economist Leonid Kantorovich’s Nobel prize winning work on optimal resource allocation useless. In hindsight, Reagan’s supply side economics (Reaganomics) would prove to be an effective strategy in the aim to stimulate and grow the American financial sector, albeit artificially. By stripping away and adding new red tape, laissez-faire economics dominated and took American capitalism to places it had never been before. Despite all that, some sectors of the American economy needed artificial legislative means to achieve that record growth.
In the 1980’s the number of arrests of drug offenses rose by 126% (National Council on Crime and Delinguency 1989). Mainly due to legislative acts such as the Comprehensive Crime Control Act of 1984. It was a mandate which radically revised the American criminal code system;It gave the government more power in civil forfeiture, reinstated the federal death penalty, and increased federal penalties for cultivation, possession, or sale of Marijuana. This was an indirect effect of Reagan’s supply driven economic stimulus. Because in order for the USA to beat out the Soviets, the US market needed to be operating at near full capacity. That meant everyone was needed to contribute to the system. No matter who you were. What followed these mandates was the rapid development of the ‘for profit privatized prison industrial complex’ . In these new prisons a new criminal was cultivated to populate them, the non-violent drug offender. As the prison industry grew so did the abundance of this newly cultivated criminal. This in effect meant more free labor for the American economic system as prisons became a new place for corporations to use “outsourced” prison labor. Leading to even more diverse growth in the corporate structure. For example, if Walmart uses prison labor to create an assembly line for a product (which it does) , then that product is cheaper for consumers, which incentivizes them to shop at Walmart.
But a lot of the economic growth in this era was feigned under complicated laws which inflated economic statistics. An example of this would be corporate share buy back schemes. This financial technique is used by corporations to inflate numbers by buying shares of the company back from individuals who’ve bought them. Share prices are inflated because less shares are out in the public’s hands. But this alone doesn’t necessitate growth. The reason why the profit margins grow is because investors are ignorant of the fact that the company is buying back it’s own shares. Generally, if people were aware of that corporate behavior confidence in that corporation would diminish. Ideally you’ll want the company to invest it’s money on the product/service it’s providing in order to turn a profit. When a company starts buying back shares that shows a lack of focus in terms of direct capital accumulation from the business. Instead buying back shares shows that a firm is more focused on marketing the fact they are still profitable. A desperate attempt to save their reputation. In principal nothing is wrong with this. But it’s wrong when the US legislation allows corporations to mask the fact they are buying back shares. This allows corporations to lie and potentially defraud investors. But ever since the 1980’s share buybacks have been allowed to remain nontransparent. Practices such as these can result in big economic bubbles. This is especially concerning when considering the fact that Goldman Sachs has recently bought back $780 billion worth of it’s own shares to avoid public scrutiny, giving us insight that this behavior is alive and well in the 21st century. Subtly, there’s an implication that the prison system may not have even played a significant part in the economic war waged by the USSR and USA. If it did generate growth then it must’ve been minimal. What seemingly played a significant role is the non transparency of certain economic strategies, one of them being corporate buy back schemes. But the creation of the non violent drug offender allowed the US private prison system a new source of labor, and therefore created growth within that industry. Nevertheless, Reaganomics resulted in a exponential growth for the American economy, one of the key factors that resulted in the collapse of the Soviet Union. Just another concrete example of the relationship shared between legislation, economics, and imprisonment.
In all, when economic instability is on the horizon, one should expect a response from those controlling the resources within a given society. This response will often translate into laws and it’s effect can be easily mapped overtime.
(Sources)
Madness and Civilisation By Michelle Foucault
The 1989 NCCD Prison Population Forecast: The Impact of the War on Drugs By James Austin Aaron David McVey
Sermo Civilis 