Which of these countries has the most prisoners per head of population? Sudan, Syria, China, Burma, Saudi Arabia, Zimbabwe, or England and Wales? We win, or rather lose: I have ranked these countries in reverse order. On this measure, England and Wales have a more punitive judicial system than most of the world's dictatorships.

On Friday, the government released new figures for the prison population. It broke all records, yet again. It has risen by 38% since Labour came to power, and now stands at 83,181. What does the government intend to do about it? Lock more people up. It is building enough new cells to jail 96,000 people by 2014. At the beginning of this month it laid out its plans for titan prisons: vast broiler units, which will each house 2,500 people. But they'll be only just big enough: the government expects the number of cons to rise to 95,600 in six years.

As ever, Britain appears to be chasing the United States. In both absolute and relative terms, the US's prison population is the highest on earth: 1% of its adult population is behind bars. This is five times our preposterous rate and six times Turkey's. It is over twice the rate of the nearest contender, South Africa. If you count the people under community supervision or on probation, the total rises to more than 7 million, or 3.1% of the adult population (all references are on my website). Black men who failed to complete high school in the US have a 60% chance of ending up in jail. I feel I need to say that again: 60% of unqualified African-American men go to prison. It's beginning to look as if the state has stopped imprisoning individuals and started locking up a social class. Is this what we aspire to?

To judge by the remonstrations of the tabloids, the answer is yes. But why? And why, in the United Kingdom, is imprisonment still rising? It's not because of rising crime. Last year crimes recorded by the police fell by 2%, while the most serious violent offences fell by 9%. Nor does it reflect the conviction rate. That fell by 4% in 2006 (we don't yet have last year's figures). Stranger still, it is not connected to the rate of imprisonment either, which fell by 9% between 2004 and 2006.

The prison population is rising for one reason: people are being put away for longer. Between 1997 and 2004, the average sentence rose from 15.7 months to 16.1. That tells only half the story: the actual time served rose as well, as a result of new laws the government introduced in 1998 and 2003. In 2004 the courts started handing down indeterminate sentences - prison terms without fixed limits. These will be partly responsible for the projected growth in imprisonment over the next six years.

This exposes a remarkable contradiction in government policy. At the beginning of last year, the criminal justice ministers sent a begging letter to the courts asking them not to bang so many people up, as the prisons were bursting. But they are bursting because of the mandatory life terms, indeterminate sentences and other stern measures policy has forced the judges to pass. In 2002, England and Wales had more lifers (5,268) than the rest of the European Union put together (5,046). I can't find a more recent comparison, and since the accession of the former communist states this is bound to have changed. But it gives you a rough idea of how weird this country is.

So why, when the number of crimes - especially serious violent crimes - is falling, are both the government and the courts imposing longer sentences? Why does the UK consistently rank in the top two places for imprisonment in western Europe? Why, as this country becomes more peaceable, does it become more punitive? I don't know. Nor, it seems, does anyone else. But one thing I've noticed is that many of the states with the highest number of convicts are also those with the greatest differential between rich and poor. Within the OECD nations, the US has the second highest rate of inequality. Mexico, which is the most unequal, has the third-highest rate of imprisonment. In the EU, four of the five most unequal nations also rank among the top five jailers. The correlation, though by no means exact, seems to apply across many of the rich countries.

This doesn't demonstrate a causal relationship. But there are three likely connections. The first is that inequality causes crime. This is what Anatole France referred to when he claimed to admire "the majestic egalitarianism of the law, which forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal bread". But, while this has proved true at most times and in most places, crime is falling in England and Wales while inequality is rising.

The second possible link is that prison causes inequality. The sociologist Bruce Western has shown that jail in the United States is a huge and hidden cause of deprivation. When people are locked up, they can't acquire the skills and social contacts they need to get on outside. Employers are reluctant to take them on when they've been released, and they tend to be hired by the day or to get stuck in the casual economy, which is one of the reasons why so many return to crime. Among whites and Hispanics, wages for ex-cons are severely depressed. Among black people the effect is less marked: the "stigma of imprisonment", Western suggests, appears to have stuck to the entire black underclass.

His groundbreaking research shows that US labour figures, which appeared to prove that the rising tide of the 1990s lifted all boats, were hopelessly skewed. The government's claim that the boom had enhanced everyone's job prospects - even those at the bottom of the heap - turns out to be an artefact of rising imprisonment: convicts aren't counted in household surveys. Western found that while general unemployment fell sharply in the 1990s, when prisoners were included, the rate among unqualified young black men rose to its highest level ever: a gobsmacking 65%.

The third possible reason for a link between the two factors is that inequality causes imprisonment. I can't prove this, and it is hard to see how anyone could do so. But my untested hypothesis runs as follows: the greater the wealth accrued by the top echelons, the more ferociously they demand protection from the rest of society. They have more to lose from crime and less to lose from punishment, which is less likely to strike the richer you become.

The people who help to generate the public demand for long prison terms (newspaper proprietors and editors) and the people who mete it out (judges and magistrates) are drawn overwhelmingly from the property-owning classes. "Those who have built large fortunes," Max Hastings, who was once the editor of the Daily Telegraph, wrote of his former employer Conrad Black, "seldom lose their nervousness that some ill-wisher will find means to take their money away from them."

Money breeds paranoia, and paranoia keeps people in prison.

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