Most people are basically good and will choose to do the right thing pretty much all the time.  There is a gamut of morality however, and some people have a different view of what is within the realm of acceptible ways to act.

The thought of getting locked up may deter some people on the shaky end of the gamut from committing crimes, but as long as such a person thinks he can get away with doing a crime that deterrence is negligible.  Once that person is actually caught and convicted of having done a crime, the choices for punishing the offender are few and not necessarily effective.  Fines may impose monetary hardship on a person, but that can be a two edged sword that can promote the attitude of revenge or of needing to find a way to pay the fine without disrupting the person's expected mode of life.  That person might well use either or both of these as rationales for returning to crime.  A jail sentence removes the person from society for the duration of the sentence, but then the person gets out and may feel a need for revenge in this case also.  In any case the environment to which the person returns is probably the same one in which he was living before, which did not instill in the person a wish not to do the crime in the first place.  Thus even if the fine or time spent in jail had served to change the person's mind about future actions, his negative environment would be likely simply to change it back.

And the ironic part of sending a person to jail is that jails are basically Convict University.  Jails are a concentrated population of many people caught and convicted of the whole range of crimes that society has deemed cause for jail time.  While the person is incarcerated, he can learn from everyone else's mistakes what not to do next time so as not to get caught.  And what a great situation in which to network.  Louie knows Sam who knows Ralphie who knows...  By the time the person is set free he could well have honed his nefarious abilities and established his contacts to perpetrate much worse crimes.

The solution to all of this is first of all to provide the best environment possible to everyone.  If people truly understand what is at hand, then it would be completely foreign to anyone to think of doing anything negative.  People would be so focused on building things up that they wouldn't even have the time or energy left to consider doing anything negative.  But there is nothing that can absolutely prevent a person from doing harm if his desire to do so outweighs his awareness that he should not.

Once a person demonstrates that he is not capable of living in the garden of Eden, he has shown he does not understand the interrelation of civilization and no longer belongs there.  He needs to live in an environment that lacks most amenities of civilization that he has denied.  If he has stolen, he needs to be bannished to a community of other people who have stolen.  If he has inflicted bodily harm, he goes to a community of those who also have inflicted bodily harm.  There he gets to remain the rest of his life.  He may not travel anywhere else or return to the open civilization.  Each of the punishment communities may of course continue to develop a better way of life and would have the option to further demote people who continued to demonstrate a lack of understanding of civilization.

In the worst cases in which a person has committed an exceptionally heinous crime(s), he loses rights to all that civilization has provided over the history of humankind.  He will not have anything except for what he, and those like him who have also shown the same disrespect for civilization, can scratch from the earth.  He will be given no houses except what they build, no electricity, no water except for what they can catch of the rain, no trees, no animals except what are able to get in -- rats, mice, maybe woodchucks but no livestock, minimal clothing, minimal medicine, no travel outside the environment, only marginal sustenance food.  Finally, the ability to bear children is also sealed off -- vasectomies on men and tying of fallopian tubes in women.  Ultimately the cost of their maintenence is borne almost entirely by them with the exception of the minimal emergency supplies provided and the land granted to allow them to live.