It is thought that workers under capitalism enjoy the freedom of changing employment at will, but studies show that unfree labor has historically existed alongside capitalist development. One explanation for the use of unfree labor under capitalism highlights the functional needs of production. However, the baoshengong, a form of bonded labor that was used in cotton mills in Shanghai from 1927 to 1937, problematizes this approach. Though the baoshengong system was not an efficient mode of labor control, it was put in place. Rejecting the functionalist account, I show that capitalist unfree labor is not necessarily spurred by production requirements. As the Shanghai case will demonstrate, unfree labor was used when the power dynamics in the larger socio-political context outside the immediate abode of production—namely, the conflict and collaboration between different forms of domination such as gang, patriarchal, capitalist, and state powers—superseded the functional considerations of the capitalists.