Suppose Smith assaults and beats up Jones.
Insofar as Smith commits a sin, he wounds his own soul. There is only one party with a problem: Smith. The state cannot save Smith from himself and does not punish Smith as a form of involuntary penance to grant him forgiveness and restoration.
Insofar as Smith does unjust harm to Jones, there are two parties to the dispute. Smith tears the proper relations between himself and Jones, as in, the bonds of civic friendship and brotherhood of men. If Jones sues Smith, then the state may help him to obtain restitution, but once again the state has no power to reforge or repair these bonds. As Jesus says,
Settle matters quickly with your adversary who is taking you to court.
Do it while you are still together on the way, or your adversary may hand you over to the judge, and the judge may hand you over to the officer, and you may be thrown into prison.
Truly I tell you, you will not get out until you have paid the last penny. (Mt 5:25-26)
How can both Smith and Jones exist together in the communion of saints marked by both superior charity and justice, when Smith’s debt to Jones has not been paid? The state can in turn beat up Smith, but that alone cannot reconcile Smith and Jones.
Finally, insofar as Smith damages social cooperation and the smooth functioning of the market process, there are three parties involved in the ugly situation: Smith, Jones, and the rest of society. Smith can’t be allowed to disrupt the thread-fine symbiotic harmony that thrives within the market economy. It would only encourage him and other like miscreants to continue to terrorize the citizens, thereby undermining their sense of security of their property rights. Deterring aggression by punishing Smith is now fully within the power of the state. Since Smith, too, is a citizen, his punishment should not be excessive but such that the marginal cost to him of an extra beating or month in prison is just outweighed by the benefit to society of the extra crime deterred.