I recommend reading Foucult's excellent if dense Discipline and Punish : http://en.wikipedia.org/wiki/Discipline_and_Punish

reading the wikipedia will give you an idea of how ideas of punishment changed over time from the Idea of public torture and execution to the prision. He argues that the state apparutus learned that punishment was more effective if evenly distrubted. The state's power must be a form of public power. Also by making punishment public you effect empathy from the public on the body of the punished.

Later he talks about the Panopticon http://en.wikipedia.org/wiki/Panopticism Which was an early 19th century prision design, created by a reformer Jeremy Bentham. Bentham proposed that the prison be constructed in a circle around a central tower. The prisioners could be watched from the tower but they couldn't see inside the tower. The idea that the prisioners could see the tower know they could be being watched at anytime was suppose to help them reform into honest citizens. This gave birth to the modern prision along with modern forms of disipline and control. What keeps you from shoplifiting? a security camera. but there is no way to know if somone is watching the security camera.