The reintroduction of prison labor contracting on a large scale would be a significant new development in the economic evolution of American penology, reversing more than a half-century of exclusion from the free market. This analysis draws significantly on the penal theory of Rusche and Kirchheimer, which states that every system of production tends to discover punishments, which correspond to its productive relationships. This theory inspired a whole new field of research linking penal developments to structural changes in the labor market. The revisionist criminology of the 1970's took this analysis in a new direction by pursuing the surplus population function. Today, at the end of the modern era, just as it seems that prisoners will never again have economic value, gaps in the labor market give new life to the idea of prison industry. The “new economy” of service industries, globalization, and market liberalism can facilitate the return of prisoners to the circuit of production. The transformation of prisoners into wage earners on a substantial scale will require a fundamental change in perception, especially among prison officials. The wage relation gives prisoners a new element of control over their situation, a greater ability to negotiate their conditions of treatment. Privatization’s ideological rationale and its political strategy of foreign job repatriation are examined. A case study of Escod Industries, involving a fundamental transformation in prison discourse, techniques, and management objectives, is explored. 1 figure, 19 notes, and 117 references.