rehabilitation: government renders (altruistic) aid to the offender for his or her good and that of "society."
restitution: government serves as the moral agent of the victims in recovering from criminals what rightfully belongs to the victims; citizens thus realize their objective self-interest through the institution of government (rational egoism). This system should not be confused with "tax-funded restitution," an oxymoron designating misbegotten statist programs that add a new set of victims (the unfortunate taxpayers) to the victims of the original crimes.

Restitution may sometimes accomplish effects similar to those sought by the advocates of punishment, deterrence, and rehabilitation. As will become clear as we proceed, however, the restitution system, considered in its totality, is quite different from any of these.

In general, advocates of punishment and deterrence tend to fear that a restitution-based system would be too lenient on criminals, while advocates of rehabilitation tend to fear that restitution would be too harsh. In reality these two criticisms cancel each other out, and neither fear is justified. Under a system of restitution, one bears precisely the marginal costs of one's own actions, insofar as they can be objectively measured and insofar as they can possibly be repaid in practice. Restitution-based justice can therefore be viewed as a praxeological expression of the virtue of justice itself, which requires that we deal with each individual in the manner merited by his or her actions (3.10:19).

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