In early 1614 a royal censor named Márquez Torres was reading the manuscript of the second part of Don Quixote, to be released the following year, when he got into a conversation with some visiting dignitaries in the company of the French ambassador. The Frenchmen, when they heard he was at work on a new book by Miguel de Cervantes, began to sing his praises and to ask about his social standing in Spain. When Márquez Torres explained to them that Cervantes is "old, a soldier, a gentleman, and poor," one of them reportedly replied, "If poverty will force him to write, then may it please God that he never have wealth, so that, though he is poor, he may make the whole world rich with his works."

The comments of the French dignitaries are revealing of a paradox that haunted Cervantes' later years, even as he began to bask in the glow of his newfound renown. Lionized around the world, immortalized after death, Cervantes lived his last days still poor and indebted. The achievements as a soldier for his country were never acknowledged; he never succeeded in recovering his back pay or in receiving a permanent government post in exchange for his service; he was arrested and jailed on numerous occasions for failing to pay debts or for allegedly misappropriating funds while working as a tax collector. A religious man, he was excommunicated not once but twice by local church officials for attempting to fulfill his obligations as a procurer for the military.

When the French dignitary suggested a connection between his poverty and his writing, he certainly meant it tongue-in-cheek; but in his wit he hit upon a subtle truth. There is a profound connection between what Cervantes invented and the persistent failures of his private life. Fiction was born of a world that failed to deliver on its promises. It was engendered by disappointment, a term which in Spanish is rendered desengaño, a better word for which could be the English disillusionment. Desengaño was indeed one of the most popular concepts of the day, and has been a key concept for literary scholars as they seek to understand Cervantes and his contemporaries. Spain and its imperial prowess flourished during the sixteenth century, but its cultural explosion at the end of that century and into the next (an explosion that included Cervantes and Quevedo along with countless other luminaries from the poetic and visual arts) accompanied and in some ways was inspired by a total loss of confidence on the part of the Spanish public toward the state and the image of the Spanish nation it tried to portray.

While many writers and intellectuals of the time recognized this condition and commented on it, merely experiencing desengaño in his own life and recognizing it in the social circumstances around him were not enough to make Cervantes the inventor of a new mode of writing. The theme of how appearances fail to represent reality is endemic in the period in cultural history known as the Baroque, and was widely recognized as such by intellectuals of the day. But Cervantes was not concerned with merely showing in his writing how social reality was unfair or how disappointing the official versions could turn out to be. What fascinated him was the nature of the illusions themselves and the arguments people used to keep themselves and others bewitched.

A great lover and patron of the nascent theater, and an experienced (if ultimately unsuccessful) playwright, Cervantes was drawn to the form of the spectacle itself, the relation between an actor and the role he is playing, and the sort of commitments made by the public that allow the magic of the theater to take place at all. Cervantes was realizing, in other words, what Shakespeare had his character Jacques famously proclaim in his play As You Like It: "All the world's a stage, and all the men and women, merely players." In his stories and novels, he would take this realization to its logical and even illogical extreme, ultimately influencing the very way the modern world would come to understand itself.

The notion of the world as stage so vital to Cervantes, though, is somewhat different from its many prior manifestations. In this version we men and women are players because our selves are divided into the characters we portray for the benefit of others and the actors who don those roles. We are performing for our fellow men and women and, in Cervantes' analysis, it is our willingness to keep up these performances that makes us the authors of our own undoing. Cervantes' fiction doesn't simply point out illusions, then. Instead, it portrays characters as they manufacture and fall for those illusions. Fiction, as innovated by Cervantes, always has the capacity to insert the reader in the place of the action, because the protagonists are themselves always reading and interpreting the reality around them. Fiction is thus not merely a false image of reality, but more crucially a portrayal and exploration of how we construe and misconstrue reality.