In general, I would say that theory plays a large role in how people within and outside of the criminal justice system approaches it. For example, theories about justice play a large role in how people outside of the system perceive it and how people within it deliver it. I think that theory has a role, a purpose, and a function in the criminal justice system. It helps provide clarity as to how elements within the system should operate and it also helps to provide reflection to ensure that individuals within it possess a strong set of core values that guide their decision making and abilities to administer justice on all levels. Theory must meet with practice, and in this light, it can be seen as limited. All the theoretical understandings in the world would not be able to do much of any good if they were not put into practice. Yet, theory plays a vitally important role in ensuring that practice is sound and good practice.
As the previous post points out, our prisons are meant to be a deterrent. Ugly prisons, long sentences, etc., all these are meant to scare people away from committing crimes.
In Norway, the focus is on rehabilitation and preparing a criminal to be able to reenter society and to do so effectively. This means that their prisons are completely different than ours and are often not scary at all.
But these theories affect everything, sentencing, the actual processing of crimes, etc. Even the investigation is changed by the way the society approaches crime and punishment in theory. If you want to help the person not do it again, you will look for different clues than if you want to simply prove beyond the shadow of a doubt that he did it.
In my opinion, theory drives the way that the criminal justice system is set up. I would say that the most obvious way in which this happens is in the correctional system.
Nowadays, the prison system is run mainly on the theory that prison terms are to be deterrents to crime. This means that there is much more of an emphasis on long sentences and tough conditions. If the prison system were run on the theory that prisoners are to be rehabilitated, the system would look a lot different. There would, presumably, be much more of an emphasis on education and the teaching of job skills, for example.
As pessimistic as customtents sounds with his answer, I kind of have to agree with him. The war on drugs that started back in the 80's has caused prison populations to skyrocket, and when you consider the growing trend of privatized prisons, it really does seem to be all about the money.
I think that it's all theoretical. Either the theory is that you are rehabing or punishing. Either way, it's really all about the money.
Conceptualizing Criminal Justice Theory: from Tohomas J Bernard and Robin Shepard Engel of the Justice Quarterly
This is a great piece that may help answer your question. Here is an excerpt:
We believe that the best way to organize criminal justice theory is to categorize it on the basis of the dependent variable. There are three general types of dependent variables: the individual behavior of criminal justice agents, the organizational behavior of criminal justice organizations, and the aggregate behavior of the criminal justice system and its components as a whole. Once theories have been classified on the basis of their dependent variables, it is possible to sort and organize by independent variables. This organization of theory promotes conceptual clarity, allows generalization across system components, and permits competitive testing of theories in criminal justice; all of these benefits will advance criminal justice as a scientific enterprise.