He was a member of the Labour Party from 1954 to 1981, and stood in two general elections as a candidate; in 1960 and in 1966. In 1960, he contested the "blue-ribbon" Remuera electorate and lost by 6109 votes to National's Ronald Algie. In 1966, he contested the Taupo electorate and narrowly lost by 258 votes by National's Rona Stevenson. He wrote that National was afraid of losing the seat so poured thousands of dollars into the campaign. A hundred Waikato women canvassed every house in Tokoroa and Putaruru over two days, using the street lists and blue dot system.
In 1968 he joined the staff at Auckland University, and during his long tenure at Auckland he has authored several leading books on the topic of New Zealand politics. He wrote Social Change and Party Reorganisation (1976) and Labour’s Path to Political Independence (1980) while still a Labour Party member, but after completing The First 50 Years: A History of the New Zealand National Party (1986) changed allegiance to National. In 1986 he also published From the Cradle to the Grave: A Biography of Michael Joseph Savage.
During the 1990s Gustafson was given a number of international academic appointments, including visiting researcher at Stanford University and the European Union in 1990, and research at a number of American and British Universities in 1994. In 1997 Gustafson was Fulbright Visiting Professor at Georgetown University. From 1998 to 2002 Gustafson was appointed Head of the Political Studies Department, and he was also Pro Vice-Chancellor (International) of the University from 2001 to 2002. In 2000 he published His Way: A Biography of Robert Muldoon.