the basic idea is if they feel like their always being watched they will behave.  i don't see any reason why this could not be achieved better with cameras. you can not only have omnipresent surveillance but you can also store the footage for review, and use other neat tricks like motion sensing, ir, ect to direct real time surveillance assets to whereever their most needed.  the real reason a penopticon won't work, digital or otherwise, is the omnipresent threat of surrvalliance only has teath if penalties for stepping out of line are severe. more severe and instant than the law would allow.
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