Hundreds of federal employees who lost their jobs in Elon Musk’s cost-cutting blitz are being asked to return to work.

Canonical studies of the origins of state capacity have focused on macro-historical or structural explanations. I review recent research in historical political economy that showcases the role of politics—agents, their constraints, and their motivations—in the evolution of state capacity. Findings from both developed and developing countries emphasize how elite conflict, principal–agent dilemmas, and ethnic and racial differences have shaped agents’ preferences for capacity. These new studies demonstrate that state capacity can be strategically manipulated by political and economic elites, and that the various dimensions of state capacity—extractive, coercive, legal—do not necessarily move together. Refocusing our attention on the political drivers of state capacity has also shed light on why there are such stark subnational variations in the development of state capacity, particularly within large polities like India, China, and the United States. The findings point to the need for more nuanced conceptualization and measurement of state capacity. Expected final online publication date for the Annual Review of Political Science, Volume 27 is June 2024. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.