The Panopticon is a type of prison building designed by English philosopher and social theorist Jeremy Bentham in 1785. The concept of the design is to allow an observer to observe (-opticon) all (pan-) prisoners without the prisoners being able to tell whether they are being watched, thereby conveying what one architect has called the "sentiment of an invisible omniscience." Bentham himself described the Panopticon as "a new mode of obtaining power of mind over mind, in a quantity hitherto without example." Bentham derived the idea from the plan of a military school in Paris designed for easy supervision, itself conceived by his brother Samuel who arrived at it as a solution to the complexities involved in the handling of large numbers of men. Bentham supplemented this principle with the idea of contract management; that is, an administration by contract as opposed to trust, where the director would have a pecuniary interest in lowering the average rate of mortality.

The Panopticon was intended to be cheaper than the prisons of his time, as it required fewer staff; "Allow me to construct a prison on this model," Bentham requested to a Committee for the Reform of Criminal Law, "I will be the gaoler. You will see ...that the gaoler will have no salary — will cost nothing to the nation." As the watchmen cannot be seen, they need not be on duty at all times, effectively leaving the watching to the watched.

According to Bentham's design, the prisoners would also be used as menial labour walking on wheels to spin looms or run a water wheel. This would decrease the cost of the prison and give a possible source of income.

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