The simple peasant who follows Don Quixote out of greed, curiosity, and loyalty, Sancho is the novel’s only character to exist both inside and outside of Don Quixote’s mad world. Other characters play along with and exploit Don Quixote’s madness, but Sancho often lives in and adores it, sometimes getting caught up in the madness entirely. On the other hand, he often berates Don Quixote for his reliance on fantasy; in this sense, he is Don Quixote’s foil. Whereas Don Quixote is too serious for his own good, Sancho has a quick sense of humor. Whereas Don Quixote pays lip service to a woman he has never even seen, Sancho truly loves his wife, Teresa. While Don Quixote deceives himself and others, Sancho lies only when it suits him.
Living in both Don Quixote’s world and the world of his contemporaries, Sancho is able to create his own niche between them. He embodies the good and the bad aspects of both the current era and the bygone days of chivalry. He displays the faults that most of the sane characters in the novel exhibit but has an underlying honorable and compassionate streak that the others largely lack. Sancho does not share Don Quixote’s maddening belief in chivalrous virtues, but he avoids swerving toward the other extreme that equates power with honor. Though Sancho begins the novel looking more like the contemporaries against whom Don Quixote rebels, he eventually relinquishes his fascination with these conventions and comes to live honorably and happily in his simple position in life. He therefore comes across as the character with the most varied perspective and the most wisdom, learning from the world around him thanks to his constant curiosity. Though Sancho is an appealing character on many levels, it is this curiosity that is responsible for much of our connection with him. He observes and thinks about Don Quixote, enabling us to judge Don Quixote. Sancho humanizes the story, bringing dignity and poise, but also humor and compassion.
Through Sancho, Cervantes critiques the ill-conceived equation of class and worth. Though Sancho is ignorant, illiterate, cowardly, and foolish, he nonetheless proves himself a wise and just ruler, a better governor than the educated, wealthy, and aristocratic Duke. By the time Sancho returns home for the last time, he has gained confidence in himself and in his ability to solve problems, regardless of his lower-class status. Sancho frequently reminds his listeners that God knows what he means. With this saying, he shows that faith in God may be a humanizing force that distinguishes truly honorable men, even when they have lower-class origins.
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In your analysis of the second part of Don Quixote, you write: "The story of Anna Felix and Don Gregorio tempers Cervantes’s otherwise rampant racism" - Really? This is a masterpiece that has survived the centuries because of it's jawdroppingly brilliant use of irony, but you can't seem to notice the difference between the first narrator (Cide Hamete's translator) and Cervantes himself!
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Any analysis of Don Quixote that doesn't mention the fact that that book is, at the core, a meditation on individual liberty, monetary debasement and the moral horror of involuntary slavery, is incomplete. See the work of Eric C. Graf of Universidad Francisco Marroquín. His article-
Juan de Mariana and the Modern American Politics of Money: Salamanca, Cervantes, Jefferson, and the Austrian School
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What would be a good paragraph on conclusion for this story?
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