(FORTUNE Magazine) – EVER SINCE Hammurabi had his ''eye for an eye, tooth for a tooth'' decree carved on a stone slab back in Babylon, society has been struggling for ways to keep people from breaking the law. Today America's answer to the Hammurabic code is prison, and plenty of it. As part of a ''get tough on crime'' policy, the U.S. over the past decade has doubled the population of its prisons and jails to a record one million. That's more convicts per capita than any other country, including the Soviet Union and South Africa. Add in the three million criminals who are either on probation or on parole, and we've got a population larger than the city of Chicago's under the aegis of our courts. To the surprise and disappointment of politicians, prosecutors, and pundits, stuffing prisons to 110% of capacity has failed to curb crime. The FBI reports that violent crimes -- murder, armed robbery, rape -- rose 10% last year to an all-time high. America now employs more private security guards than police officers, a sure sign that the system isn't working. Day after day, tabloid headlines scream of one teenager shooting another for a $100 pair of Nikes or of some innocent child gunned down in a drug deal gone bad. Says New York City Police Commissioner Lee Brown: ''The sad truth is that while we've ended the war in the Gulf, we still have to fight on the streets of our cities.'' Some good news: Patrick Langan of the Bureau of Justice Statistics has examined FBI data going back to the early 1960s and says that they show there may be at least some connection between raising incarceration rates and slowing the rate of increase in violent crimes. But throwing record numbers into prison still hasn't altered the adage -- crime pays. Not that most criminals earn a lot. Mark A.R. Kleiman, a policy analyst at Harvard's Kennedy School, calculates that the typical burglar earns $50 an hour, assuming the average heist takes two hours and nets roughly $100 after the goods are fenced. But those wages fall to 33 cents an hour once you divide them by the average prison sentence that convicted burglars receive. Says Kleiman: ''As a way to earn money, crime is a really dumb, dumb activity. McDonald's pays much better.'' But the typical criminal is what economists would call a heavy discounter of the future -- he lives for the here and now, and cares less than the average Joe (or Jane) about the possibility he might go to jail. Nor is his disdain entirely irrational. Every time some latter-day Scarface commits a felony today, his chance of serving time is roughly one in 100. Even when caught, crooks spend relatively little time in jail. As prisons have become more crowded, the average prison term served per robbery has dropped from 57 months in 1986 to 38 months in 1988. Those long odds make dealing drugs -- the one crime that really does offer high returns -- seem even more worth the risk. Never mind the big boys, the wholesalers who can pull down millions of dollars a year. According to a new study by Peter Reuter and Robert MacCoun of Rand Corp., even small-time street dealers in Washington, D.C., gross on average $48,000 a year. They net $24,000 tax-free after paying for the drugs and their runners. For many on these mean streets, that's more than enough to compensate for the higher than average risk of getting killed by a rival dealer. EVEN CRIMES that don't pass a cost-benefit test may seem worth attempting to a perpetrator who is a drug user, which most crooks in the U.S. apparently are. More than 70% of Wisconsin prisoners reported that they went into crime to get money for drugs. As for the fear of getting busted, George Fountain, 24, a convicted cocaine dealer from Trenton, New Jersey, observes, ''I was too busy being high to worry.'' Would dedicating vast new sums to build more prisons make society much safer? Not if the pattern of the 1980s holds. The U.S. already spends some $60 billion a year on all aspects of law enforcement. State spending on prison construction in the past decade rose four times faster than spending on education, and in many states is now among the largest budget items. If the country keeps throwing people in prison in the 1990s at the rate of the 1980s, it will have to build some 250 new cells a day. That's at least $5 billion a year for construction costs alone, money that's hard to come by in this era of strapped state budgets. Concludes Norval Morris, a University of Chicago Law School professor: ''Using more prisons to fight crime is like using a mosquito to attack an elephant.'' What could make the prisons a more effective deterrent would be to increase the certainty of punishment. Again, because of overcrowding, many criminals -- particularly young ones -- are arrested and convicted three or four times before serving any prison time. Federal Judge Frank Easterbrook argues for punishing criminals the first time they're caught. As he puts it: ''If you raise the price of rutabagas, people will buy fewer rutabagas.'' But unless the courts further reduce the average length of sentences, throwing more people into jail faster will also require a big increase in prison building. One person who buys the argument for more certain punishment is President Bush. In his new crime bill he proposes expanding the number of federal crimes punishable by the death penalty, making sentences mandatory for repeat felons caught with guns, limiting appeals by death row inmates, and lifting restrictions on the kind of evidence that can be used in criminal trials. Even if the bill passes -- and Washington insiders expect some kind of compromise to emerge by summer -- it will likely have limited impact. More than 90% of law enforcement takes place on the state and local levels, and Washington is not talking about sending more money to help the states fight crime. More important, the U.S. needs to go beyond simply locking up more people. Sure, society must incarcerate violent criminals swiftly and with a vengeance. But because of the country's toughened stance on drugs, it's likely that an increasing number of those going to prison will be nonviolent drug offenders. Many of this crowd might be rehabilitated more effectively -- and at a much lower cost -- outside prison walls. That would have the additional merit of opening up more cells for the truly nasty. Any long-term campaign to reduce crime must focus on America's inner cities, where most lawlessness reigns. The Sentencing Project, a nonprofit organization in Washington, D.C., reports that one in four young black males is on probation, paroled, or behind bars. That's a higher percentage than are in college. Black Americans are also six times more likely to be murdered than white Americans. To underscore the extent of the violence in the ghettos, UCLA professor James Q. Wilson calculated a few years ago that were it not for the murders of blacks -- mostly by other blacks -- the U.S. homicide rate would be reduced to that of Luxembourg. This bloody tide will never be turned back unless today's kids can be taught the right set of values. Instilling them is above all the responsibility of the family. Says John Carlson, a New York City cop: ''The best police force, schools, and churches in the world aren't going to help unless you have the kind of family that smacks a kid on the mouth when the police bring him home.'' Even so, the federal and local governments can chip in by providing the poor with more day-care programs like Head Start, more drug education and job training programs, and more community youth centers that give kids a place to hang out and stay out of trouble. Anything government can do to foster job creation in the inner cities would also help. Meanwhile, justice authorities must come up with better ways to handle the crime explosion. Progress will be slow and difficult. But the nation's police, prosecutors, wardens, and academics are starting to zero in on three strategies that show promise: -- Adopt community policing. In Madison, Wisconsin; Newport News, Virginia; and a handful of other cities, police have begun working more closely with families and communities to help troubled kids before they choose crime as a career. Sound too mushy to be believed? Well, in New York City, where crime is as tough as it gets and the cops are unrivaled cynics, Police Commissioner Brown recently announced that his entire 26,601-person force would convert to community policing within the next few years. Community policing is an acknowledgment that the current method, in which cops mainly respond to endless 911 emergency calls, just isn't working. Says Lieutenant Danny Ruffle of New York: ''Nine-one-one has become a monkey on our back.'' New York City, for instance, received over nine million 911 calls last year, more than one for every man, woman, and child in the city. Typically, a victim calls 911, and the police show up minutes after a crime is committed. Such a swift appearance may comfort the victim, but it doesn't help either prevent or solve crimes. The vast majority of cases -- some 80% of nonviolent crimes and 74% of robberies -- never even lead to arrests. Those that are solved are cracked by detectives who show up hours, even days, later. Commissioner Brown claims community policing won't require more cops. To free up enough time, however, the police must cut back on 911 calls, answering only true emergencies like a crime in progress. If they spend only half their time on 911 calls, they could devote the rest to getting to know the community, building bridges and collecting information that could prove useful in solving or, better still, deterring crimes. So far the cops seem to like community policing. Says Lieutenant Ruffle of Brooklyn's Bensonhurst neighborhood: ''In my 20 years of policing, it's the most rewarding of anything I've done.'' What Ruffle likes is the way he and his men are getting results. In his precinct, residents used to complain about young people hanging out on 86th Street, a lively working-class main street, and the spot where the movie Saturday Night Fever was filmed. For years hundreds of kids had cruised 86th Street at night -- driving up and down, doing drugs, getting into fights, snatching purses, and playing blaring boom boxes. Sending uniformed officers in to issue summonses had proved useless in dealing with this problem. Citizens were still afraid to walk the streets at night, and shops closed early. UNDER COMMUNITY policing, Ruffle was able to free some officers to try a different approach. First, they gathered a few residents and formed a civilian patrol. Every weekend night these locals would ride up and down 86th in cars with flashing yellow lights. The kids didn't like being watched, especially , since the civilian patrol would notify police if they spotted a drug sale or any other hanky-panky. Then the cops worked with a community group and got the city transportation department to change the street signs to make it tougher for the cruisers to park. They even helped a local community group open a youth center to give local kids a place to go after school. Today on a spring evening, it's clear that the neighborhood has reclaimed 86th Street. True, many of those hooligans probably ended up cruising in somebody else's neighborhood. Even so, at least this one is better off. As Mike Farrell of the Vera Institute, an organization that studies and advises the New York City Police Department, points out, ''No one knows if community policing makes a difference in crime rates. But it will clearly make a difference in the quality of life in many cities.'' Community policing has its critics. One argument: Cops, who in New York City earn $46,000 after three years, are expensive social workers. Some insist that putting uniformed cops back on the street may actually help crooks. Robert Panzarella, a professor at John Jay College of Criminal Justice, argues that officers in patrol cars have more mobility and can sometimes surprise criminals. Says he: ''The uniformed cop on the beat is the criminal's best friend. He can always see where the cop is.'' Supporters like Commissioner Brown disagree: ''We solve crime with information. If the cop on the beat can create a partnership with people in the community, then community policing will eventually reduce crime.'' Given the failures of the traditional approach, it certainly seems worth trying. -- Control handguns. America is the most violent developed nation on earth. Its murder rate is 15 times higher than Britain's and Japan's. Why? Some criminologists say it's our Wild West culture, others our heterogeneous society. That our citizens own 40 million to 50 million handguns -- weapons that are responsible for about half the murders in the U.S. -- also has to be a factor (see following story). In terms of the emotion it triggers, gun control ranks up there with abortion and capital punishment. The conservative National Rifle Association argues for few or no controls. Liberal groups like the Coalition to Stop Gun Violence advocate banning the sale of all handguns. The police, too, believe their job would be easier if there were fewer guns on the street. As one New York cop quips, ''We want to be the only armed force in the neighborhood.'' What would happen if all handguns in the U.S. were destroyed tomorrow? Murders would surely drop, since guns are many times more lethal than knives, pipes, and other tools of destruction. Ironically, assaults would probably rise, because when a crime like robbery or rape is committed with a knife or pipe, the criminal is more likely to use it. Mass confiscation, however, is not a serious policy option. Bolstered by Ronald Reagan's recent endorsement, the Brady bill -- a mild form of gun control named after James Brady, the White House press secretary who was seriously wounded during the attempted assassination of Reagan -- is gaining support in Washington. The bill, which was just approved by the House, requires a seven-day waiting period before anyone could buy a handgun. This would give dealers and police time to check whether the purchaser is a felon or has a record of mental instability, both of which would prevent him from buying a gun. THE BRADY BILL is a good start, but it doesn't go far enough. Even if it passes in the Senate and is signed into law by President Bush, most police departments would continue to have no cheap and easy way to find out whether a gun buyer had a record in another state. What's needed is a national database, akin to one Virginia set up a few years ago at the state level. By finally putting some teeth into their various local gun laws, Virginia law enforcement officials calculate that they have so far kept 1,463 felons and mental patients from buying guns and captured 16 fugitives. The U.S. should also consider licensing guns. Such a proposal will outrage folks who drive around sporting bumper stickers that say things like I'LL GIVE UP MY GUN WHEN THEY PRY IT FROM MY DEAD FINGERS. But demanding a license is no more than we require of drivers. And it could help save a few of the 1,500 Americans who die every year from accidental gun deaths -- and heaven knows how many of the roughly 12,000 who are murdered by somebody wielding a gun. Ultimately the courts would have to decide whether such a policy violates the Constitution's Second Amendment. But a licensing requirement is not likely to trouble most Americans. In a recent Gallup Report, 78% of those polled believed laws governing the sale of handguns should be made tougher, though less than half agreed their sale should be banned. Eventually, tightening up sales and licensing requirements would mean fewer guns floating around. The price of guns on the black market would then go up, making it costlier if not harder for criminals to buy them. Now they're ridiculously cheap. When he was dealing drugs, New Jersey's George Fountain says he owned two handguns, one bought on the streets of Trenton for $5. -- Expand alternatives to prison. Florida, Georgia, New Jersey, and other states are experimenting with programs designed to handle criminals who don't pose an immediate threat to society yet need to be punished. These programs give judges the option of sentencing a prisoner to what are known as intermediate sanctions -- alternatives ranging from house arrest to community service to drug treatment. In New Jersey a state probation officer normally oversees nearly 200 criminals, which by definition guarantees little or no supervision. But under a new intermediate program for nonviolent felons, each officer is responsible for only 20. This luxury allows him to get significantly involved in the prisoner's rehabilitation. Like a big brother, he makes sure the ex-inmate holds a job, stays off drugs, does community service, and keeps a curfew. Says New Jersey probation officer Joseph Grinkevich: ''Whether you like it or not, the way to succeed in life is to inculcate middle-class values.'' One person helped by such supervision is Dennis Rooney, an automotive assembly worker now serving a four-year sentence for possession of cocaine. After he spent three months in the slammer, a panel of three New Jersey judges saw little reason for Rooney, who had religiously attended drug and alcohol treatment programs before his trial, to stay in prison. After being let out, Rooney moved into a modest Trenton house with wife Maggie, daughter Anna, and pet Rottweiler, Sarge. Officer Grinkevich visits him a few times each week and helps get his life back together. By conducting random tests, Grinkevich makes sure Rooney stays off drugs and alcohol. The officer also ensures that he participates in a drug treatment program, keeps his job at the Rescue Mission (he's on temporary layoff from his auto job), does community service work on evenings and weekends at a local hospital, and observes an 11 P.M. curfew. If Rooney ever has trouble with his job or is tempted to go back on drugs or booze, he can talk with Grinkevich and try to work out his problems. Says Rooney: ''Jail wasn't rehabilitation. I have a lot of gratitude. This program was a gift for me. As long as you stay away from drugs, you'll do fine.'' Of course, if Rooney breaks any of these rules or stays out of work for more than 30 days, he gets added penalties, like an earlier curfew or extra community service. It costs the state only $6,000 a year to keep people like Rooney out of trouble, compared with $25,000 a year for prison. In addition, Rooney today is a productive member of society, holding a job and paying taxes. Right now only 530 people are in New Jersey's program, hardly enough to make a dent in the prison population. But over time Harvey Goldstein, New Jersey's director of probation, believes this, combined with other intermediate sanction programs, could cut the state's prison population by as much as 25%. As for saving money on prison itself, there's not much hope. Private prisons, which handle roughly 2% of the nation's convicts, end up costing about as much as state-run facilities. That's because the states have to set up expensive auditing and contract departments to oversee them. Cutting back on prison rehabilitation programs like school and job training would only raise the likelihood of prisoners' returning to a life of crime. AMERICAN BUSINESS could help prisons save money. In Arizona, Best Western has for ten years employed female prisoners as reservation operators for its hotels. Part of the money they earn offsets the cost of their room and board. Under its private-sector prison-industry enhancement program, the Justice Department is experimenting with 59 such projects. To expand them much further, however, federal and state laws that prohibit the sale of products made by convicts -- and bar inmates from earning market wages -- would need to be changed. Thomas Roth, warden of Stateville prison south of Chicago, thinks it's worth a try: ''We can train these people as well as anyone in any factory, and we can compete.'' What are the odds that most of these new approaches will ever be widely accepted? Skeptics rightly point out that politicians win votes by promising more cops and more prisons, not more probation officers and more drug treatment programs. But as Princeton political scientist John DeIulio argues, ''The bottom line is that we should be trying to mete out criminal justice in a more humane and economical way.'' And trying, of course, to reduce the number of victims of crime. As America's crime rates and costs keep mounting, unconventional methods that deliver results may yet win their day in court.

CHART: NOT AVAILABLE CREDIT: SOURCE: U.S. DEPT. OF JUSTICE CAPTION: Prison population

CHART: NOT AVAILABLE CREDIT: MARIA KEEHAN FOR FORTUNE/SOURCE: FBI (UNIFORM CRIME REPORTING) CAPTION: Violent crime

CHART: NOT AVAILABLE CREDIT: SOURCE: 1990 WORLD HEALTH STATISTICS ANNUAL CAPTION: WORLD MURDER RATES*

CHART: NOT AVAILABLE CREDIT: FORTUNE TABLES/SOURCE: NEW YORK CITY POLICE DEPT. CAPTION: AMERICA'S MURDER CAPITALS*