This punishment goes back at least as far as Ancient Greece, where it was commonly inflicted on watchmen who fell asleep at their posts: their oversight being punished by this damage to their sight. In Roman law, it was a common penalty for theft, adultery (covetous sins of the eye) and perjury – even, in some cases, treason. Ambition was associated with vision.
Various methods were employed at different times: hot vinegar and/or lime could be poured into the eyes, or a rope could be twisted around the head until the eyes came out of their sockets. Sometimes it was considered sufficient to force the malefactor to stare at a white-hot dagger or a red-hot iron dish until their sight was permanently clouded. Gouging or burning the eyes out physically was generally reserved for the battlefield.
In the story of Oedipus, it is notable that he first blinds himself with two pins in response to the discovery of his (unwitting) incest, and is then sent into exile. The two penalties often go together as alternatives or (as in his case), complements.
For the assocation between BLINDNESS and poetic vision or prophesy (cultivating the inner eye of imagination), cf. HOMER, OVID.
[Phliip Gentile & Josephine Medved, eds. The Student’s Dictionary of Ancient History. Cambridge: Adaspe, 1993. 45.]