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The Prison Industrial Complex: Crisis and Control

by Christian ParentiSpecial to CorpWatch
September 1st, 1999

Source: drooker.comIn 1964 a tsunami swept over Crescent City, California completely destroying the downtown. Only nine people died, but the town - nestled just below the Oregon border -- never recovered.

In 1989 another tsunami hit -- this time the tidal wave was political. The California Department of Corrections rolled in, and with little opposition built the sprawling $277 million Pelican Bay State Prison, one of the newest, meanest super-max lockups in the system. The prison is also Crescent City and Del Norte County's largest employer.

The new prison's political and economic clout is exaggerated by Crescent City's extreme isolation and poverty. Only four of the area's seventeen saw mills are still in operation, commercial salmon fishing is dead, and during the mid-eighties 164 businesses went under. By the time the California Department of Corrections came scouting for a new prison site, unemployment had breached twenty percent.

Today, Pelican Bay provides 1,500 jobs, an annual payroll of $50 million. Indirectly, the prison has created work in everything from construction to domestic violence counseling. Also cashing in on the action is a huge Ace Hardware, a private hospital and a 90,000 square foot K-mart, selling everything from toothpaste to Spice Girl paraphernalia.

The Prison Industrial Complex


The little town and the big prison is a marriage of convenience replicated in scores of communities.


The little town and the big prison: it is a marriage of convenience replicated in scores of communities in recent years. From Bowling Green, Missouri, to rural Florida, economically battered towns are rolling over for new prisons. Nationally the tab for building penitentiaries averaged about $7 billion a year over the last decade. One report has more than 523,000 full-time employees working in American corrections -- more than in any Fortune 500 company except General Motors.

Is prison building the jobs program and vehicle for government economic stimulus in a post- cold-war, demilitarized America? Is the emerging prison industry replacing the web of civilian, government, military interests and private capital that Eisenhower dubbed the "military industrial complex"? This is the position held by a few on the left and, to some extent, by writers in the Wall Street Journal and Atlantic Monthly.

But this perspective raises several questions. First, is the military industrial complex withering and being transformed piece by piece into a domestic war machine? A glance at the facts suggests not. The 1999 Pentagon budget topped $297 billion, the greatest in real terms ever. That's six to ten times the total annual tab for incarceration. So while Hekler and Koch and other arms dealers may be pushing their wares on America's cops and Wackenhut Corrections sinks more capital into private prisons, these expansions are not forced by a peace-driven pentagon downswing.

Nonetheless, are specific corporate interests driving criminal justice policy, as is often the case with military policy? This "prison as pentagon" argument generally cites three ways in which incarceration bolsters capitalism: government economic stimulus for stagnant communities (like Crescent City), the privatization of prisons and prison-related services, and the exploitation of prison labor by private firms. All of these facets of the prison industrial complex are important, but none of them -- alone or together -- explains why we are headed for what Jerome Miller, co-founder of the National Center on Institutions and Alternatives, calls a "gulag state."

This article explores each of the crucial points on the prison-business nexus, and then offers a different explanation for the lockdown economy: one based not on specific corporate interests, but rather on an analysis of criminal punishment as a class struggle from above.

Prison Labor

Critics of the prison industrial complex focus a great deal of attention on prison labor. Many say that incarceration is increasingly driven by big corporations looking for profits. They point the finger at Microsoft, Starbucks, Victoria's Secret and TWA for using cheap, well disciplined prison labor. In reality, most corporations use subcontractors who on occasion use prison labor, but more often use cheaper, more productive overseas workers. Nationwide, only 2,600 convicts work for private firms. Corporations don't like the invasive, controlled environment of prisons, where guards often interrupt production to strip search the employees. Nor are many big firms willing to risk the bad press associated with exploiting convicts. Montgomery Ward, for example, has a charter pledging that the company will not use child, slave, or convict labor.


Microsoft, Starbucks, Victoria's Secret and TWA use cheap prison labor.


Then there are state owned "prison industries." The federal government's Unicor employs 20,000 convict workers manufacturing everything from wire to office furniture. These are impressive numbers, and it might seem that there's a lot of money being made. In fact, Unicor - like other ventures owned by the state prison system - is heavily subsidized and would collapse in a few months if forced to compete with the private sector. Navy officials say that compared to the open market Unicor's "product is inferior, costs more and takes longer to procure."

This is not to suggest that prison labor is unimportant. Politically and ideologically it is very important. And for the inmates who do the work, issues of fairness and safety are paramount. But in terms of explaining why policy makers are so eager to lock people up, prison labor is a sideshow.

Private Prisons

Another player in the prison industrial complex is the fast growing and powerful private prison industry. For-profit lockups currently control some five percent of all U.S. prison beds. They make huge profits and spend amply to sway politicians and public opinion. The current round of private incarceration began with a Reagan sponsored experiment to house INS detainees at private detention centers in Houston and Laredo, Texas.

In response to the federal government's broad invitation to capital, a pair of Tennessee entrepreneurs using money from Kentucky Fried Chicken and the know-how of several public sector corrections veterans set up the first private prison company, Corrections Corporation of America (CCA). For most of the eighties and early nineties CCA, like its competitors, concerned itself with cherry picking -- seeking easy to handle contracts for minimum-security prisons.

But CCA and the others soon set out after bigger prizes. Corporate jailers now control roughly 100,000 prison beds nationwide, in 27 different states. CCA's market share is approximately half of all privatized America prison beds. Globally, its barely regulated empire includes 78 prisons in 25 states, the District of Columbia, Puerto Rico, Australia and the United Kingdom. CCA's record of inmate escapes and hiring untrained guards who brutalize prisoners is notorious.

Yet, financially CCA has performed handsomely. One investment firm dubbed it "a theme stock for the nineties." To maintain market dominance CCA does things the old fashioned way: giving generously to politicians and buttering up the press. In recent years CCA's CEO has distributed more campaign money to Tennessee politicians than any other individual. The company also operates a robust lobbying operation in DC and in several states where it has operations.


While private prisons are profitable, they don't lower the cost of incarceration for state governments.


The second largest private jailer is Wackenhut Corrections, with about 17,000 beds at 24 facilities. Named after its founder, former FBI agent George Wackenhut, the firm is a subsidiary of Wackenhut's private security service, which made it big more than forty years ago by scooping up contracts to guard America's nuclear waste dumps and testing installations. Wackenhut also did some freelance spooking. By the late sixties the corporation had dossiers on three million American "potential subversives." This was the largest collection of private surveillance files in American history and was later handed over to the FBI. By the 1970s and 1980s the company had expanded into strikebreaking and guarding US embassies. George Wackenhut still runs the business from his castle-like mansion in Florida and from the deck of his yacht, Top Secret.

Behind CCA and Wackenhut is a hungry pack of some sixteen other firms that run local jails, private prisons, and INS detention centers. Underwriting the growth of both public and private prisons are a battery of mainstream financial houses. Giant Wall St. firms such as Goldman Sachs, and Merrill Lynch write between two and three billion dollars in prison construction bonds every year. Swimming along side the big fish of incarceration are schools of for-profit caterers, prison HMOs, private transport companies, architecture firms and other subcontractors that feed at the margins of the prison industrial complex.

While private prisons are profitable, they don't lower the cost of incarceration for state governments. They merely gouge at the other side by taking all amenities and services from prisoners and by hiring often incompetent, unqualified guards. The private jailers are bad but they only control 5 percent of all prison beds and they have not hijacked national corrections policy the way military contractors have. Besides they are increasingly unpopular -- even with many Republicans. Therefore it seems that private prisons are not pushing criminal justice policy in the way that arms manufactures do with defense policy.

Class Warfare From Above


Capitalism needs and creates poverty, yet corporate America is threatened by the poor.


So what is driving the lockdown? At the heart of the matter lies a basic contradiction: capitalism needs and creates poverty, intentionally through policy and organically through economic crisis. Yet corporate America is also threatened by the poor. These so called "surplus populations" help scare working people into obedience, and keep wages low. Yet at the same time the poor (who in the United Sates are disproportionately people of color) make the upper middle class (who are mostly white) uneasy. At times they rebel and burn down the ghetto, or even more threatening to the status quo, they organize and demand economic redistribution.

In the past the poor were managed through a mix of social amelioration and repression. From the New Deal of 1930's through the 1970's an increasing portion of the system's cast off population were absorbed through a social safety net. People of color, particularly in the rural South, were largely excluded and managed the old fashion way: via brut force. But America's incipient social welfare state began to cause trouble in the late sixties, that's when profits began to shrink and the economy slid into recession.

Crucial to that crisis was rising labor agitation. By the early seventies wildcat strikes had shut the nation's postal system, coal fields, truck industry and railways. During one nationwide strike in which 12 unions whooped General Electric's ass, strikers reportedly collected $25 million in welfare. Despite recession in the early seventies the ratio of quits to lay-offs was rising. Workers were no longer afraid of unemployment because there was a social welfare system supporting them. The war on poverty was subsidizing the war against corporations.

Reagan put an end to all that. A severe recession in the early eighties, conservative courts, and a mass assault on all forms of government subsidies to poor and working people -- from low-income housing programs, to job training to welfare -- helped to tip the scales back to capital's favor. So now profits are in recovery while the working public, particularly people of color, bleeds. But how to regulate the poor?


Criminal justice regulates, terrorizes and disorganizes the poor.


The answer in the 1990's is clear: racialize poverty via criminal codes, such as drug laws and mandatory minimum sentences that disproportionately affect poor people of color. Then lock up as many people as possible for as long as possible. In this way criminal justice regulates, absorbs, terrorizes and disorganizes the poor. It also bolsters institutionalized racism by disenfranchising and marginalizing large numbers of brown people. But unlike social welfare programs, the war on crime doesn't have the side effect of empowering, or at least cushioning, the poor and subsidizing their struggles. Nor does the new model of control set loose dangerous notions of racial equality or social inclusion, as did some War on Poverty programs of the 1960's. The prison industrial complex is containment the old fashioned way, via segregation, fear mongering, race-baiting, and naked force.

As for solutions: we need less. Less policing, less incarceration, shorter sentences, fewer laws governing individual behaviors, and less obsessive discussion of every lurid crime in the news media. Two-thirds of all people entering prison are sentenced for non-violent offenses, which means there are literally hundreds of thousands of people in prison who pose no major threat to public safety.

There is already an over abundance of good ideas on how to handle troubled youth, drug addicts, impoverished sex workers, and spousal abusers. Many are quite inexpensive and effective. And since the need for work is at the heart of any real war on crime, we should create jobs that pay a living wage and meet human needs. All over the country there are small pockets of dedicated activists fighting against tremendous odds and the deafening silence of the mainstream press, from Latino youth demanding more schools and fewer prisons, to inmates filing joint grievances against abusive staff, to Families Against Mandatory Minimums. These are the people pointing the way out from the waste, terror, and abuse of America's criminal justice lockdown.

Christian Parenti, Credit: Sheila TullyChristian Parenti is author of Lockdown America: Police and Prisons in the Age of Crisis, Verso, 1999. He teaches at New College of California in San Francisco. His writing has appeared in The Nation, The Progressive and the Christian Science Monitor.