German-Jewish statesman, industrialist, and philosopher who organized Germany's economy on a war footing during World War I and, after the war, as minister of reconstruction and foreign minister, was instrumental in beginning reparations payments under the Treaty of Versailles (Versailles, Treaty of) obligations and in breaking Germany's diplomatic isolation.

Rathenau was the son of Emil Rathenau, the founder of the immense Allgemeine-Elektrizitäts-Gesellschaft (AEG (AEG AG)) combine. He studied philosophy, physics, chemistry, and engineering at Berlin and Strassburg (Strasbourg) and received his doctorate in 1889. He subsequently held a number of executive positions in German industry and, at the outbreak of World War I, headed the AEG. One of the few German industrialists who realized that governmental direction of the nation's economic resources would be necessary for victory, Rathenau convinced the government of the need for a War Raw Materials Department in the War Ministry. As its head from August 1914 to the spring of 1915, he ensured the conservation and distribution of raw materials essential to the war effort. He thus played a crucial part in Germany's efforts to maintain its economic production in the face of the tightening British naval blockade. He then returned to business and writing, but, when the collapse of the Western front became imminent in the autumn of 1918, he proposed a desperate levée en masse (“call to arms”) to turn defeat into victory.

After the war, Rathenau helped found the middle-class German Democratic Party and advocated a policy of cooperation with the Social Democratic Party of Germany. Convinced that the days of unrestricted capitalism were over, he advocated in his Die neue Wirtschaft (1918; “The New Economy”) industrial self-government combined with employee participation and effective state control rather than the wholesale nationalization of industry by the state.

Rathenau combined democratic convictions and a strong belief in international cooperation with economic experience and a knowledge of foreign countries. He entered the government of Karl Joseph Wirth (Wirth, Joseph) in May 1921 as minister of reconstruction, and in that post he initially advocated a policy of fulfillment of Germany's obligations under the Treaty of Versailles as part of a general European reconstruction scheme. On January 31, 1922, he became foreign minister. Although Western-oriented, on April 16, 1922, he negotiated with the Soviet Union the Treaty of Rapallo, which reestablished normal relations and strengthened economic ties between the two countries that had been outcasts from the concert of European powers. This affronted the Western Allies, since it marked the first time since the war's end that Germany had asserted its position as an independent agent in international affairs.

Despite this diplomatic success, which was hailed by many Germans, Rathenau was increasingly reviled at home. To the extreme right he represented the whole German postwar system, which they hated, and he was also, as author of the Treaty of Rapallo, the promoter of “creeping communism.” The extreme nationalists' hatred of him was intensified by his being Jewish. Rathenau was assassinated on the way to his office by right-wing fanatics. His collected works were published in 1918.