These three mechanisms cannot be reduced to theories of law, or derived from moral choices. They are technologies of power. The problem is why the third model was adopted. Why did the coercive, corporal solitary model replace the representative, signifying, collective model?
This section is in one sense a continuation of themes introduced in the discussion of eighteenth century reformers and theories of punishment. The obstacle-sign represents a crime and its associated penalty together, in a way that is public and easy to understand. Crudely put, the obstacle-sign works like this: a man is tempted to steal, but then thinks of the penalty, which is probably the confiscation of his possessions. He is no longer tempted to steal. There is a link between the punishment and the crime: if you steal, the state takes away your property. Petty theft is a fairly minor crime, so the penalty is neither severe nor long-lasting. People see the thief losing his property, and are deterred.
Foucault imagines this relationship of signs as a coherent system, or economy. This is perhaps his most obvious use of structuralist terminology (see Context). The system operates in what he calls the punitive city, a place in which watching is still important, but in a different way. The model here is the theater, where what you see is not real but a representation. A degree of distance is introduced between the spectator and the action. The punitive city is not the ritual of the public execution, chiefly because it aims to prevent future lawbreaking.
More importantly, this is a system in which prison is an impossible idea, because it does not represent anything, and does not relate to the public. But prisons soon dominated punishment in Europe. Their dominance was by no means assured. Foucault makes it clear that several legal and representative obstacles existed. In France, for example, prison was for debtors and those sent there by the arbitrary power of the King, through a so-called lettre de cachet. Few people suggested its widespread use in the early eighteenth century.
The dominant one was corrective penality. This form of punishment was not representative, but involved coercion of the soul, as described in the first section. Correction attempted to "reset" the soul back to obedience by introducing certain new habits. It did not try to restore the individual to the place in society he had lost by breaking the law, but rather to create a subject who obeyed without question. In order to achieve this goal, secrecy and control over punishment were needed. This is a very different situation to that of the public, visible representation of punishment.
In many ways, this is a key turning point in Discipline and Punish. Foucault shows the beginning of modern coercive institutions. The coercive institution is very different to the punitive city: there is no theater, and the punishment itself is hidden and based on an idea of training. There were three ways for the prison to develop, but only the third took off. This is very characteristic of Foucault's genealogical method. He shows turning points and crucial breaks in order to make us realize that things could have been different. The rest of the book is an attempt to explain why one particular element prevailed, not from choice but through the operation of power.