Goldstein joined the Social Democratic Party of Germany (SPD) in 1914, and was considered part of its left wing.
The first executive committee of the KAPD consisted of Emil Sachs ("Erdmann"), Frederick Wendel ("Friedrich") and Arthur Goldstein ("Stahl").
Together with Schröder and Dethmann, Goldstein was a vigorous opponent of the Hamburg Faction and their supporters in the KAPD, Heinrich Laufenberg and Fritz Wolffheim, who advocated national communism.
At the second party congress of the KAPD from 1–4 August 1920 in Berlin-Weißensee, Goldstein argued successfully for the departure from the Hamburg Faction.
In the same period he wrote in social-democratic newspapers such as Vorwärts and maintained contact to other left-wing organisations, such as the Trotskyist Left Opposition.