It's a staggering case; more staggering still that it has scarcely been mentioned on this side of the ocean. Last week two judges in Pennsylvania were convicted of jailing some 2,000 children in exchange for bribes from private prison companies.

Mark Ciavarella and Michael Conahan sent children to jail for offences so trivial that some of them weren't even crimes. A 15-year-old called Hillary Transue got three months for creating a spoof web page ridiculing her school's assistant principal. Ciavarella sent Shane Bly, then 13, to boot camp for trespassing in a vacant building. He gave a 14-year-old, Jamie Quinn, 11 months in prison for slapping a friend during an argument, after the friend slapped her. The judges were paid $2.6m by companies belonging to the Mid-Atlantic Youth Services Corp for helping to fill its jails. This is what happens when public services are run for profit.

It's an extreme example, but it hints at the wider consequences of the trade in human lives created by private prisons. In the US and the UK they have a powerful incentive to ensure that the number of prisoners keeps rising.

The US is more corrupt than the UK, but it is also more transparent. There the lobbyists demanding and receiving changes to judicial policy might be exposed, and corrupt officials identified and prosecuted. The UK, with a strong tradition of official secrecy and a weak tradition of scrutiny and investigative journalism, has no such safeguards.

The corrupt judges were paid by the private prisons not only to increase the number of child convicts but also to shut down a competing prison run by the public sector. Taking bribes to bang up kids might be novel; shutting public facilities to help private companies happens - on both sides of the water - all the time.

The Wall Street Journal has shown how, as a result of lobbying by the operators, private jails in Mississippi and California are being paid for non- existent prisoners. The prison corporations have been guaranteed a certain number of inmates. If the courts fail to produce enough convicts, they get their money anyway. This outrages taxpayers in both states, which have cut essential public services to raise these funds. But there is a simple means of resolving this problem: you replace ghost inmates with real ones. As the Journal, seldom associated with raging anti-capitalism, observes: "Prison expansion [has] spawned a new set of vested interests with stakes in keeping prisons full and in building more ... The result has been a financial and political bazaar, with convicts in stripes as the prize."

Even as crime declines, lawmakers are pressed by their sponsors to increase the rate of imprisonment. The US has, by a very long way, the world's highest proportion of people behind bars: 756 prisoners per 100,000 people, just over 1% of the adult population. Similarly wealthy countries have around one-tenth of this rate of imprisonment.

Like most of its really bad ideas, the last Conservative government imported private jails from the US. As Stephen Nathan, author of a forthcoming book about prison privatisation in the UK, has shown, the notion was promoted by the home affairs select committee, which in 1986 visited prisons run by the Corrections Corporation of America (CCA). When the corporation told them that private provision in the US improved prison standards and delivered good value for money, the committee members failed to check its claims. They recommended that the government should put the construction and management of prisons out to tender "as an experiment".

Encouraged by the committee's report, the CCA set up a consortium in Britain with two Conservative party donors, Sir Robert McAlpine Ltd and John Mowlem & Co, to promote privately financed prisons over here. The first privately run prison in the UK, Wolds, was opened by the Danish security company Group 4 in 1992. In 1993, before it had had a chance to evaluate this experiment, the government announced that all new prisons would be built and run by private companies.

The Labour party, then in opposition, was outraged. John Prescott promised that "Labour will take back private prisons into public ownership - it is the only safe way forward." Jack Straw stated that "it is not appropriate for people to profit out of incarceration. This is surely one area where a free market certainly does not exist." He too promised to "bring these prisons into proper public control and run them directly as public services".

But during his first seven weeks in office, Straw renewed one private prison contract and launched two new ones. A year later he announced that all new prisons in England and Wales would be built and run by private companies, under the private finance initiative (PFI). Today the UK has a higher proportion of prisoners in private institutions than the US. This is the only country in Europe whose jails are run on this model.

So has prison privatisation here influenced judicial policy? As we discovered during the recent lobbying scandal in the House of Lords, there's no way of knowing. Unlike civilised nations, the UK has no register of lobbyists; we are not even entitled to know which lobbyists ministers have met. But there are some clues.

The former home secretary, John Reid, previously in charge of prison provision, has become a consultant to the private prison operator G4S. The government is intending to commission a series of massive Titan jails under PFI. Most experts on prisons expect them to be disastrous, taking inmates further away from their families (which reduces the chances of rehabilitation) and creating vast warrens in which all the social diseases of imprisonment will fester. Only two groups want them built: ministers and the prison companies - they offer excellent opportunities to rack up profits. And the very nature of PFI, which commits the government to paying for services for 25 or 30 years - whether or not they are still required - creates a major incentive to ensure that prison numbers don't fall. The beast must be fed.

And there's another line of possible evidence. In the two countries whose economies most resemble the UK's - Germany and France - the prison population has risen quite slowly. France has 96 inmates per 100,000 people, an increase of 14% since 1992. Germany has 89 prisoners per 100,000 - 25% more than in 1992 but 9% less than in 2001. But the UK now locks up 151 out of every 100,000 inhabitants: 73% more than in 1992 and 20% more than in 2001. Yes, our politicians have barely come down from the trees, yes we are still governed out of the offices of the Daily Mail, but it would be foolish to dismiss the likely influence of the private prison industry.

This revolting trade in human lives creates a permanent incentive to lock people up: not because prison works, not because it makes us safer, but because it makes money. Privatisation appears to have locked this country into mass imprisonment.

monbiot.com