Prison labor has a long tradition as been seen as a source of income in form of a cheap involuntary labor. To the point that you got people imprisoned on arbitrary laws to keep that workforce large enough. Many states exploited this hard after the ban of slavery, to the degree that offenses where made up, like not being allowed to change your employer as a freemen in order to keep the slave like workforce large enough. If you look at the history its hard to pin the moment where this ought to have ended. After the worst offenders of openly racist laws aimed at forcing people into slave like conditions got revoked and three wars relying on the draft happened, the war on drugs had started with another set of arbitrary prosecutions. The history of incentives to acquire more prisoners is quite a bit older then the private prison complex.
edit: About the history of prison labor as a replacement for slavery, "Slavery by another Name" by Douglas A. Blackmon is a great book on the topic.
> Here’s how it worked. Black men – and sometimes women and children – were arrested and convicted for crimes enumerated in the Black Codes, state laws criminalizing petty offenses and aimed at keeping freed people tied to their former owners’ plantations and farms. The most sinister crime was vagrancy – the “crime” of being unemployed – which brought a large fine that few blacks could afford to pay.
> Black convicts were leased to private companies, typically industries profiteering from the region’s untapped natural resources. As many as 200,000 black Americans were forced into back-breaking labor in coal mines, turpentine factories and lumber camps. They lived in squalid conditions, chained, starved, beaten, flogged and sexually violated. They died by the thousands from injury, disease and torture.
edit: About the history of prison labor as a replacement for slavery, "Slavery by another Name" by Douglas A. Blackmon is a great book on the topic.