You're thinking of the Panopticon[1] concept by the English philosopher Jeremy Bentham[2]. The concept was later used in a more general sense as a metaphor of the Western society by the French sociologist Michel Foucault[3].

[1] http://en.wikipedia.org/wiki/Panopticon [2] http://en.wikipedia.org/wiki/Jeremy_Bentham [3] http://en.wikipedia.org/wiki/Michel_Foucault