Chandler & Schwartz explain in A New History of Spanish Literature that:
The pícaros, upon whom the picaresque novel is based, were usually errand boys, porters, or factotums (persons employed to do a wide variety of tasks) and were pictured as crafty, sly, tattered, hungry, unscrupulous, petty thieves. They stole to escape starvation and were likable despite their defects.
The picaresque novel, a reaction against the absurd unrealities and idealism of the pastoral, sentimental, and chivalric novels, represents the beginnings of modern Realism. It juxtaposed the basic drives of hunger cruelty, and mistrust and the honorable, glorious, idyllic life of knights and shepherds. Hunger replaced love as a theme, and poverty replaced wealth.
Early picaresque novels were both idealistic and realistic, tragic and comic, and the authors attacked political, religious, and military matters. Some authors were sincere reformers, while others conveniently set off their sermons so they might be easily avoided. They reflected the poverty and and unsound economic conditions of late sixteenth century Spain. Spaniards were living in a dream world after the glories of the conquest of the New World. They flocked to the cities, the upper classes refusing to work with their hands, cultivate the land or engage in business or commerce, all of which were viewed as degrading. Poor knights starved with the beggars. Thus, comic elements are omnipresent, the sentiment is tragic -the tragedy of a Spain that was outwardly the most powerful nation in the world but inwardly on the path to decline and ruin. The picaresque genre faithfully portrays these tragic conditions.
The picaresque novel is autobiographical and episodic in nature, as the pícaro recounts his adventures in the service of one master after another. These novels rarely came to a conclusive end, and were sometimes continued in later volumes. They inherited a long history of satire and bourgeois humor (. . .). Spanish writers gave the picaresque genre an intensity and urgency, however, that was previously lacking and made their picaresque tales one of the landmarks of European realism.
Usually the pícaro is of the lower classes. Forced into a life of servitude by the severity of the times, he drifts into a life of petty crime and deceitfulness in his struggle for survival. The tone of the novel is hard, cynical, skeptical, often bitter, and it often portrays the corrupt and ugly. Humor abounds, but it is only a step removed from tears, and what appears to be funny is tragic in a different light.
The pícaros ordinarily write in their old age about their experiences as idealistic youths. Yet they do not present the whole picture. In its emphasis on the seamier side of life, the picaresque novel twists and deforms reality. The pícaro lives by his wits and steals and lies just to stay alive. His many employers give the narrator the opportunity to satirize various social classes and to paint a portrait of a period full of living, brawling human beings.
[Extracted from: Chandler, Richard E & Kessel Schwartz, A New History of Spanish Literature, (Baton Rouge: LSU Press, 1991), pp. 118-20.]
First picaresque novel:
La vida de Lazarillo de Tormes y de sus fortunas y adversidades (1554).