The Prison Industry
Part 1 of a 3 Part Series
By Randall G. Shelden, M.A, Ph.D
Senior Research Fellow, Center on Juvenile and Criminal Justice

Incarceration: The United States versus the World At the close of 2009, the U.S. prison population was 1,610,446—a rate of 504 inmates in custody per 100,000 U.S. residents. If we include jails, the number of people incarcerated totals more than 2.3 million, and the incarceration rate climbs to 754 (Sabol et al., 2010). As noted in the New York Times:
The United States leads the world in producing prisoners, a reflection of a relatively recent and now entirely distinctive American approach to crime and punishment. Americans are locked up for crimes—from writing bad checks to using drugs—that would rarely produce prison sentences in other countries. And, in particular, they are kept incarcerated far longer than prisoners in other nations (Liptak, 2008).
The United States incarcerates almost 25% of the world’s prisoners yet has only 5% of the world’s population. The overall world prison population rate is 145 per 100,000; 59% of the countries in the world have rates below 150 prisoners per 100,000 population (King’s College London, 2009). The next highest rates are the Russian Federation (626) and Rwanda (593). Canada’s incarceration rate is less than one-sixth the U.S. rate despite relatively similar economic and political systems. As Nils Christie (2000) points out, there is one important difference: Canada has more of a “social safety-net” various welfare benefits) than does the United States. The crime rate in Canada has risen and fallen in the last 40 years similar to the crime rate in the United States, but its imprisonment rate has remained stable (Liptak, 2008).
Historically the imprisonment rate changed very little between the early 20th century and the late 1970s. As noted in the overview, from the 1920s to the mid-1970s the number of prisoners fluctuated between around 100,000 and 300,000 while the rate remained rather steady at around 100. Since then the numbers and the rate boomed upward, driven largely by the “war on drugs” and extremely harsh sentencing laws (e.g., Three Strikes, Mandatory Sentencing). As the first decade of the 21st century comes to a close, the United States faces a growing crisis in imprisonment that threatens to cause unprecedented fiscal problems for virtually every state and large city in the country. The increases have also created what many have called a “prison industrial complex” that is as problematic as the “military industrial complex” (Shelden, 2010, chapter 2).

The Prison Industrial Complex
The data provided above, along with the quotes at the start of this paper, indicate that incarceration is a huge industry in the United States. About $69 billion is being spent each year on the correctional system (more about this below). What many have called the prison industrial complex represents an interconnection among the prison system, the political system and the economic system - just like the military represents a connection with the political and economic system, what has been called the “iron triangle,” originally mentioned by President Eisenhower when he brought attention to the Military Industrial Complex in 1960.
This is similar to what Lilly and Knepper (1993) called the “correctional-commercial complex,” which they describe as a sort of “sub-governmental policy-making” system consisting of an alliance between government and private enterprise. Lilly and Knepper noted that this system is quite similar to the “military industrial complex,” since it consists of patterns of interrelationships known variously as “policy networks,” “subgovernment” or the “iron triangle.” They argued that such a system may not be legally a form of government, but nevertheless may exert greater influence than more formal structures of the government. In comparing this system to the military equivalent they note that within the military subgovernment there is an “iron triangle” of the Pentagon, private defense contractors, and various members of Congressional committees (e.g., armed services committees, defense appropriations committees). They noted further that the decision-making within any given policy arena “rests within a closed circle or elite of government bureaucrats, agency heads, interest groups, and private interests that gain from the allocation of public resources” (Lilly and Knepper, 1993, p. 152). Politics and economics go hand in hand, which is how politicians get elected. Think also of the large number of lobbyists in the nation’s capital (Parenti, 2007; Frank, 2008). Also, consider for a moment about the costs involved in the construction of prisons, jails, courthouses, police departments and furnishing them with everything they need to keep going (construction costs, electrical, furniture, toilet paper, etc.), all of which involve many different private enterprises (Christie, 2000; Shelden and Brown, 2000; Herivel and Wright, 2007).
A perfect example was the influence of Tom Beasley (head of the Republican Party of Tennessee) in 1983, Doctor Crants (with ties to Sodexho-Marriott) and Don Hutto, who was at the time the president of the American Correctional Association (ACA). In 1983 all of the individuals unified to help Corrections Corporation of America (CCA) enter the market by attempting to take over the entire prison system of Tennessee (Selman and Leighton, 2010, p. 55-56). More about CCA in a later section of this paper. A deeper understanding of this requires some discussion of the “free market” and the drive for profits within a capitalist economic system. It is to this subject that we now turn.

Prisons as a “Market” for Profits
As Robert Heilbroner (1985) notes, within a capitalist society there tends to be an insatiable desire to continue “converting money into commodities and commodities into money” (p. 60).
Everything, it seems, is turned into a “commodity” - from the simplest products (e.g., paper and pencil) to human beings (e.g., women’s bodies, slaves). Indeed, within a capitalist society “daily life is scanned for possibilities that can be brought within the circuit of accumulation,” since any aspect of society that can produce a profit will be exploited. Life itself has been “commodified” (Heilbroner, 1985, p. 60).
Part of this drive for profits stems from the ideology of the “free market,” a system of beliefs that under girds the entire capitalist economic system. According to this ideology every individual pursues his or her own personal interests and the result is a collective good for the entire society. It is Adam Smith’s “invisible hand” at work. Corporations are “free” to do whatever they want. The failure of this philosophy became evident in late 2008 and continues to the present date. The current recession illustrates this perfectly. These “free markets” faltered miserably and taxpayers were called upon to “rescue” them. This is nothing less than socialism for the rich and free enterprise for everyone else. A good assessment of the present economic crisis is found in Paul Krugman’s book The Return of Depression Economics (2009) and several of his columns in the New York Times (such as Krugman, 2010).
A key part of the development of private prisons is the belief that the free market can do it better than the government. Although distrust of government dates back to the early years of the country, it became more common during the Reagan Administration. As the authors noted in Chapter 2, Ronald Reagan summed it up nicely when he said in 1981 that “Government is not the solution to our problems. Government is the problem.” What he and others with similar views keep forgetting to mention is that government is a problem “unless it can benefit big business,” which in fact it has done with much regularity for more than 100 years. Anti-government feelings have reached a boiling point during the past year or so, as exemplified with the so-called “Tea Party” movement. Incidentally, some fact checking on the size of the government under different administrations and lo and behold it has consistently increased more under Republican administrations than under Democratic administrations. Specifically, during a 40 year period (1962-2001) the total of non-defense government employees rose by 310,000 during Republican administrations, while during Democratic administrations there was an increase of just 59,000. In other words, of the 369,000 employees added, 84% were added under Republican administrations. The size of the government got even bigger under Bush, going from 18.4 percent of GDP in 2000 to 20.3 percent of GDP in 2006 (Ward, 2008). While Clinton increased the federal budget by 11%, under Bush it went up by 104 percent (De Rugy, 2009). Also, the national debt went up by 72% under Bush (Knoller, 2010). This is the irony of free market worshipers: they actually want the government to help them out whenever possible. Without a doubt CCA and other private prison operators like the government.
Reagan was so enamored with the idea of the privatization of prisons that he established a special commission – the President’s Commission on Privatization. Its report of 1968 was for all practical purposes a foregone conclusion, as most of the members were already leaning toward support of privatization. The only opposition came from the American Bar Association. Many groups that were against the idea, such as the American Federation of State, County and Municipal Employees (AFSCME), were never invited to testify. The commission concluded by supporting privatization.
This “free market” includes the prison system. The amount of money that flows into the financial resources of the prison system from tax dollars alone is quite substantial. As shown in Expenditures for prisons came to about $69 billion in fiscal 2006, an increase of more than 650 percent over 1982 when the figure was about $9 billion. In California, between 1998 and 2009, the prison budget grew from $3.5 billion to $10.3 billion (California Department of Corrections and Rehabilitation, 2009).
Similarly, the budgets for probation and parole have also been increasing. The most recent data available for probation and parole are from the year 2000. While in fiscal year 1992 the average budgets for both probation and parole came to $23 million, in the year 2000 the average was $71 million, an increase of 209 percent. What is most interesting about the budgets for probation and parole is that the largest increases went to the parole system, with their average budgets going from $25.5 million in 1992 to $43.1 million in 2000, compared to a very modest increase for probation budgets from $55.7 million to $56.3 million. The total budgets for both probation and parole came to just over $1.7 billion in fiscal year 2000 (Camp and Camp, 2000).

A Prison-Building Frenzy
Prison construction quickly became a booming business. In 1980 there were only 44 prisons; in 2002 there were 102, with 11 more under construction (Johnson, 2003). During the 1990s a total of 371 new prisons opened. (Approximately 92,000 new beds were added each year.) In 1999 alone, 24 new prisons were opened, at a total cost of just over $1 billion. The average cost of building a new prison came to $105 million (about $57,000 per bed). Also, in 1999 a total of 146 prisons were adding or renovating beds at a cost of $470 million (about $30,000 per bed). The total estimated costs of these new building projects come to more than $2.2 billion (Camp and Camp, 2000). These figures may be a bit misleading. A review of the Federal Bureau of Prisons web site finds that as of October, 2008, there were a total of 180 “facilities” plus 14 private “facilities.” These “facilities” include not only prisons but also “camps” and “correctional complexes” (which include more than one “facility”). Regardless of which source is most accurate, the federal prison system is huge and covers both rural and urban areas all over the country.
The construction of new prisons has become such a big business that there are several web sites devoted to the topic. For example, the Government Accountability Office (GAO) (Government Accountability Office, 2008) issues reports on various prison construction projects. Also, many states publish reports on recent or upcoming construction projects (Oregon, State of, 2010; Firestone and Hansen, 2001). One interesting report comes from web site called Reed Construction Data (2008) which shows 10 planned prison construction projects around the country. A Google search also turns up dozens of companies advertising for prison construction. One example, among many, is Kitchell. According to their web site they have built “more than 110,000 detention and corrections beds in place,” and they boast that “Kitchell stands among the most experienced program, project and construction management firms for criminal justice facilities in the country. Those years of experience include more than 130 projects in 17 states, among them are 42 state prisons, 30 adult jails, 30 juvenile facilities, four return-to-custody centers, two California Youth Authority institutions, as well as police stations, courts facilities, camps and other justice-related projects” (Kitchell, 2010).
Interested readers may want to pick out a few states at random and see how many prisons presently exist and how many have been built in recent years or will be built in the coming years. Take the state of North Carolina for example. On the web site for the North Carolina Department of Corrections (2010) there is a chart showing the prisons recently opened or about to open in that state. Between 1989 and May, 2008 a total of 26 correctional facilities (including two for young offenders, two work farms and a women’s prison) were opened. Currently eight correctional facilities are under construction. As of October 5, 2010 North Carolina had a total of 70 prisons and 40,371 prisoners and an incarceration rate of 368 as of June, 2008 (up from 28,772 and a rate of 345 in 2002), a rate considerably below the national rate of 504. Has there been a significant increase in crime lately? Not at all. According to the FBI Uniform Crime Reports (Federal Bureau of Investigation, 2010) in 2009 the rate of violent crime was 404 and for property crime it was 3,668; in 2005 the rate for violent crime was 468 and for property crime it was 4075.