Economics, Empire, and Madness: Rereading Don Quijote
- Arda Tunca
- Jun 29
- 9 min read
I wrote the article, The Contradictory Paths of Civilization, when I was 22, just after graduating from university. The books and articles I had read ignited in me a dream: to spiritually conquer the land of 1492. That dream came true in 2012.
I first flew to Barcelona, then to Sevilla. From there, I rented a car and set out to explore Sevilla, Córdoba, Granada, Cádiz, and more, seeking to feel, with every step, the historical weight and human meaning behind the Alhambra Decree.
The article below is a distillation of all I have studied, experienced, and carried in my intellectual DNA.
The Message of Don Quijote
What is Don Quijote really about? For centuries, readers have seen it as a farewell to chivalry, a comedy of delusions, or a satire of outdated ideals. But, beneath the humor and madness lies something more unsettling: a world that no longer makes sense.
Cervantes wrote in a time when Spain was torn between fading feudal values and a new, harsher reality shaped by money, bureaucracy, and power.
The novel does not just mourn a lost past, it defends values in danger of extinction. Don Quijote stands for justice, loyalty, mercy, dignity, and moral courage. He refuses to accept that self-interest is the only rational choice. He insists on defending the vulnerable, telling the truth, and living with integrity, even when the world mocks him. These are not just old-fashioned virtues. They are ethical foundations that any society needs.
The novel’s message is not just about one man’s madness, but about a society where meaning and virtue have collapsed.
Its warning still resonates today: in an age of misinformation, financialized life, and declining public trust, Don Quijote’s refusal to abandon moral clarity reminds us why the novel remains timeless.
In that collapse, Cervantes asks: what do we lose when ideals are no longer useful? Don Quijote endures not just as literature but as a political and economic allegory: a lament for a vanishing moral world and a sharp satire of the new one being born.
Spain and the World in Cervantes’s Time (1547–1616)
Before Alfonso X, another monarch cast a long shadow over Castilian identity, Ferdinand III. Known for his military conquests against Muslim-ruled territories, Ferdinand III was paradoxically also a symbol of religious coexistence. Upon his death in 1252, he was buried in Seville with an extraordinary epitaph: inscribed in Latin, Castilian, Arabic, and Hebrew, it was a gesture of multilingual and multireligious acknowledgment.
Ferdinand's reign, though rooted in Christian Reconquest, did not erase cultural diversity. It accommodated it. This was not mere diplomacy, it was a recognition of a shared civilizational space.
Cervantes, writing 350 years later, inhabited a world where that pluralism had been annihilated. The tombstone of Ferdinand III stands as a silent monument to a Spain that could have become something else, a country where law, language, and learning coexisted across difference. In the austere world of Don Quijote, that possibility is gone, and its absence is deeply felt.
This tolerance, however, was not purely ideological. It was deeply tied to economic and political strategy. Ferdinand III’s willingness to allow Muslims and Jews to remain in conquered territories, such as Córdoba (1236) and Seville (1248), was driven in part by the practical need to preserve tax revenue, maintain agricultural productivity, and ensure civic order.
Muslims and Jews were valuable contributors to the local economy, paying special levies like the jizya, and were often indispensable in commerce, irrigation-based farming, and urban management. Expulsion or forced conversion would have destabilized these vital systems. In this sense, Ferdinand’s coexistence policy was a calculated form of governance that saw tolerance as a means to economic stability and administrative continuity.
Alfonso X continued and deepened this strategy, though with more intellectual ambition. His court famously welcomed Christian, Muslim, and Jewish scholars who worked together on legal, astronomical, and philosophical texts. This intercultural collaboration not only elevated Castilian prestige but also laid the groundwork for more rational governance.
Alfonso’s Siete Partidas reflected a legal mind attuned to the complexities of a multiethnic realm. He also relied on Jewish financiers and tax administrators to sustain the royal treasury and support his imperial ambitions. His policies codified contract law, formalized property rights, and attempted monetary regulation, all of which supported a more predictable commercial environment. For Alfonso, tolerance was not merely a moral gesture. It was an instrument of effective statecraft and economic rationality.
Thus, while the legacy of Ferdinand III and Alfonso X is often idealized as a golden age of convivencia (coexistence), it was shaped equally by strategic interest. Tolerance was politically useful and economically advantageous. The tragedy, as Don Quijote later reveals, is that this fragile balance collapsed under the weight of orthodoxy, fiscal crisis, and imperial overreach.
To grasp the scale of the decline Cervantes witnessed, it helps to look further back. Nearly three centuries earlier, under Alfonso X “el Sabio” (the Wise), Castile experienced a moment of cultural and legal consolidation rarely matched in medieval Europe. His court sponsored scientific inquiry, promoted vernacular literature, and produced the Siete Partidas, a rational legal code that reflected a commitment to justice rooted in Christian universalism and Roman law. Alfonso’s vision, while feudal, was intellectually ambitious.
By Cervantes’s time, that vision was shattered. The cosmopolitan tolerance of Alfonso’s court had given way to the persecution of Jews, Muslims, and later Moriscos, Muslims in Spain who were forcibly converted to Christianity, especially after the fall of Granada in 1492, the last Muslim stronghold in Iberia.
The intellectual pluralism of the 13th century had been replaced by the dogmas of the Inquisition. The fiscal and monetary innovation that once stabilized Alfonso’s realm had eroded into debasement and disorder.
Cervantes wrote in a Spain that had not just lost its empire, but its moral imagination. Don Quijote reflects the exhaustion of that earlier promise, an elegy for a nation that had traded wisdom for orthodoxy, and justice for extraction.
Cervantes lived through the terminal decline of Spanish imperial supremacy. The period between 1598 and 1620 marked a decisive crisis in Spanish power and identity. Spain, flush with silver from the Americas, found its domestic economy in ruins. Inflation spiraled out of control, driven by monetary debasement and reckless imperial spending. Prices for essential goods, such as Andalusian corn, more than doubled in just a few years (e.g., from 430 maravedís per fanega in 1595 to 1,041 in 1598). Yet the wealth concentrated in the hands of the monarchy and the Church did little to alleviate poverty.
The expulsion of the Moriscos in 1609, justified in the name of religious purification, was a catastrophic blow to agricultural productivity and social cohesion. Simultaneously, the Spanish state increasingly relied on fiat copper currency (vellón), which rapidly devalued and contributed to monetary instability. Banditry, plague, and urban destitution became commonplace.
The empire was overstretched, the aristocracy parasitic, and the rural poor crushed under taxation and grain shortages. Spain, once triumphant, was descending into decadence. Cervantes, himself imprisoned for debt and exposed to slavery in Algiers, observed this slow national decay firsthand.
Globally, Europe was in transition. The Protestant Reformation had shattered Catholic uniformity. The scientific revolution was beginning to upend traditional cosmologies. And mercantilism, the belief that wealth lay in bullion, protected markets, and state intervention, dominated economic policy. Spain, rather than innovating, clung to feudal privileges and colonial extraction. Into this turbulent world stepped Cervantes with his critique wrapped in fiction.
The School of Salamanca: Economic Thought Before Economics
Emerging in the early 16th century and flourishing through the early 17th century, the School of Salamanca was a pioneering intellectual movement centered at the University of Salamanca.
Theologians such as Francisco de Vitoria (c. 1483–1546), Domingo de Soto (1494–1560), Martín de Azpilcueta (1492–1586), Tomás de Mercado (1525–1575), Luis de Molina (1535–1600), and Juan de Mariana (1536–1624) laid the foundations for modern economic thought within the framework of scholastic natural law.
Key features of the School’s economic theory include:
Subjective Theory of Value: Martín de Azpilcueta argued that the value of goods arises not from intrinsic worth but from scarcity and desirability, ideas that would later be foundational to the Austrian School.
Just Price Doctrine: The School redefined the medieval concept of the "just price" in terms of market dynamics rather than theological norms.
Critique of Inflation: Juan de Mariana fiercely attacked the Spanish crown’s debasement of currency, arguing that manipulating money supply caused injustice and economic disorder. His 1609 treatise, De Monetae Mutatione, became an early assault on fiat manipulation.
Defense of Private Property and Free Exchange: Though rooted in Catholic doctrine, the Salamancans advocated for voluntary contracts and the moral legitimacy of profit, contingent upon fairness and mutual benefit.
Anti-Slavery and Human Dignity: Vitoria’s work on the rights of indigenous peoples and the moral critique of forced labor laid ethical ground for universal human rights debates.
The School of Salamanca synthesized theology, law, and proto-economics, developing a deeply moral political economy that opposed arbitrary authority, both ecclesiastical and royal, and recognized the autonomy of the individual in the marketplace.
Influence on Later Economic Thought
Though largely forgotten during the Enlightenment’s embrace of secular reason, the Salamanca tradition persisted underground. Its influence can be traced through:
Hugo Grotius and early natural law theorists in the Dutch Republic.
Adam Smith, whose Wealth of Nations (1776) echoes Salamanca’s defense of exchange, while rejecting its moral-theological base.
Liberal political thinkers such as John Locke and the American Founders, who drew indirectly from natural law traditions rooted in Salamanca.
Austrian economists, including Carl Menger and Ludwig von Mises, who rediscovered subjective value theory and cited the School as a proto-liberal precursor.
The paradox, of course, is that while the School of Salamanca laid the groundwork for classical liberalism, its critiques were rooted in moral theology, not secular utilitarianism. Economics, as it emerged in the 18th century, severed itself from ethics. Cervantes did not.
Cervantes, Salamanca, and the Spanish Crisis
Don Quijote, published in 1605 and 1615, is thus not merely a literary milestone, it is a reflection of a moral and economic collapse. The madness of its protagonist is not just a personal delusion but a cultural diagnosis. Cervantes understood, like the Salamancans, that injustice cloaked in legality is still tyranny. He exposed the contradictions of empire, the failures of fiat currency, and the illusions of honor-based society in transition.
Cervantes did not write treatises, but his fiction carried the weight of Salamanca’s insights. He understood, implicitly, the theory of subjective value, the human cost of monetary manipulation, and the cruelty of coerced labor. More importantly, he retained a humanist anchor that later economic theory would often abandon.
Spain in the time of Cervantes was not a nation in ascent, it was a fading empire crushed under its own contradictions. The Salamancans sought to provide intellectual tools for moral clarity. Cervantes gave those tools flesh and blood. Don Quijote’s tragic dignity, Sancho Panza’s bargaining wit, and the landscape of rogues and realists reflect a world caught between feudal illusions and capitalist brutality.
Don Quijote’s Cultural Afterlife: Music and Literature
The enduring resonance of Don Quijote extends far beyond literature. Cervantes’s novel has inspired an extraordinary range of musical and literary adaptations that reflect its philosophical, comedic, and tragic dimensions. These works form a kind of cultural echo chamber, amplifying the novel’s central concerns about idealism, disillusionment, and human dignity.
In music, Don Quijote has appeared in operas, tone poems, ballets, and musicals:
Georg Philipp Telemann composed the suite Don Quichotte (1761), a humorous Baroque rendering of Quixote’s adventures.
Richard Strauss created the symphonic tone poem Don Quixote (1897), in which cello and viola personify Don Quixote and Sancho Panza.
Jules Massenet wrote the opera Don Quichotte (1910), giving the story a lyrical and romantic frame.
Maurice Ravel composed Don Quichotte à Dulcinée (1934), a set of songs capturing the knight’s longing and melancholy.
Ludwig Minkus and Marius Petipa produced a ballet adaptation, first performed in 1869 and still staged globally today.
The Broadway musical Man of La Mancha (1965), later adapted into film, famously reframed the story around the song "The Impossible Dream," turning Quixote into a universal figure of hope and defiance.
In literature, the novel has inspired reinterpretations, philosophical commentaries, and even metafictional sequels:
Miguel de Unamuno in Vida de Don Quijote y Sancho (1905) saw Quixote as the embodiment of Spain’s spiritual essence.
Jorge Luis Borges explored Quixote as a symbol of infinite textual play in stories like "Pierre Menard, Author of the Quixote."
Graham Greene, Salman Rushdie, and Kathy Acker have all written works that reimagine or invoke Cervantes’s hero.
This enduring legacy is explored in Harold Bloom, The Western Canon: The Books and School of the Ages (1994), where Bloom places Don Quijote at the heart of the Western literary tradition and highlights its influence on modern writers. Similarly, Edward Friedman, Critical Insights: Don Quixote (2011), offers essays that trace the novel’s impact on contemporary literature, including works by Greene, Rushdie, and Acker.
The figure of Don Quijote has transcended genres, nations, and centuries. Each adaptation reactivates his struggle against power, absurdity, and forgetting. These works affirm that the madness Cervantes wrote about is never just madness. It is a mirror held up to each generation’s failures and hopes.
Before economics became a science, it was a matter of conscience. Cervantes knew this. The School of Salamanca knew this. Perhaps, that is why Don Quijote still speaks to us today, not only as literature, but as a warning against forgetting what makes a society just.
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