In 2021, major segments of the business lobby converged around a consensus for criminal system reform. As the United States experienced historic levels of labor market tightness, business groups argued for removing “barriers” to employment that system-involved people face. Just a few months later, the orientation of business to the criminal system was decidedly more mixed. By March 2022, the U.S. Chamber of Commerce, the country’s most powerful business lobby, had stepped to the forefront of the national moral panic around retail theft, launching a vigorous campaign to defend and even strengthen criminal punishment across the country.

Anchoring its analysis in the concept of racial capitalism, this Article argues that these disparate pictures, together, illustrate the criminal system’s constitutive role in the U.S. political-economic order. The criminal system plays such a role, I argue, by serving as both a labor governance institution and as a staging ground for struggles around how the U.S. political economy should work, and for whom.

The Article proceeds as follows. Part I develops the concept of racial capitalism to anchor the analysis that follows. Part II surveys the leading scholarly accounts of the criminal system’s labor governance functions. I then reconstruct and supplement these accounts to develop a new theoretical framework. I argue that the criminal system should be understood as rationing total available employment, and channeling and sorting system-involved people into precarious work. In these respects, the system functions as a foil to the idea of a federal job guarantee, which labor and civil rights groups struggled for unsuccessfully in the 1970s. This theoretical groundwork leads into a critique of the business community’s consensus around reform, which is better understood as part of a multilayered strategy to preserve an imbalance of power between workers and employers. Part III develops an account of the prison-industrial-complex to explain how its structural foundations, rooted in state and local balance sheets, prime the criminal system to serve as a staging ground for broader political-economic struggle. While recent scholarship has focused on the critiques and demands of abolitionist and other left social movements to illustrate this function, I look in the other ideological direction. I analyze how the U.S. Chamber of Commerce has used the issue of retail theft to simultaneously strengthen the criminal system across the country, as well as to defend its idea of “American free enterprise.” This case study shows how racialized state violence and anti-state ideas about free enterprise are joined together in a project of mutual justification. Part IV concludes. Given the overall picture this Article develops, I argue that we should revisit the idea of a federal job guarantee, as a path not taken, and potential program for the future. But whether the criminal system ceases to function as a major labor governance institution any time soon will depend, in part, on whether labor movements recognize its constitutive role in the broader political economy and oppose it. The business lobby, on the other hand, has already made the connection.