Here is the problem of law. It is no law without consequence. Just as we noted above, “don’t touch this book” is not a law, even though it is prohibitive language. Law is created by the affixing of punishment.
Alma’s argument for the essentiality of punishment in the scheme of God has an interesting development here. Alma is suggesting that without law (defined by its associated punishment) there would be nothing on which justice could act. Remember Paul’s statement that there is no sin without law. Without law, justice has nothing to act upon, because there is nothing to judge against. Justice cannot hold us liable for the violation of something that doesn’t exist.
Similarly, if there is no soul in danger of “punishment” because of law, there is nothing for “mercy” to do. Mercy cannot save us from something that isn’t happening. If we are not subject to “punishment” there is no way for mercy to save us from a punishment that doesn’t exist. Once again, Alma is demonstrating the absolute requirement of both justice and mercy, with law/punishment as a description of the justice end of the pole, and mercy repentance/atonement on the other end.