Art eats itself in Daniel Kehlmann's play The Mentor, which brings Oscar-winner F Murray Abraham to Bath at the start a season of German new writing. The Homeland star plays the mentor in question – a veteran playwright getting €10,000 for a five-day development scheme with an emerging writer. It's an awkward encounter that reveals less about art than about the hierarchies and vagaries of the industry around it.

Benjamin Ruben has one hit to his name. The Long Road, written at 24, is a classic – the sort of play people read at school and hold dear for life; literature that lives in the collective consciousness. Every writer aspires to that, very few achieve it. Decades later, people still come up to him to express a connection to "your play." Singular. He might smile, but it stings.

Whether by nature or exasperation (probably both), Benjamin has become a bitter egoist; a man for whom "weather is over-rated." Unimpressed by almost everything, he makes an impossible adviser for the 30-something playwright Martin Wegner (Daniel Weyman), a little-produced modernist clinging to the one review that crowned him "the voice of his generation." Supported by his art historian wife Gina (Naomi Frederick), he needs the fee every bit as much as Ruben, who lives off crap screenplays and former glories. Much to the older man's disgust, they're both being paid the same, but Ruben has his eyes on another prize: Gina.

If Kehlmann's play is little more than an aesthetic treatise, albeit one couched in (masculine) psychology, it does nail the way art both rejects and respects its past. Weyman shows Martin's mix of reverence and contempt for Ruben, his need for affirmation from a writer he loathes. Art's enemy is its industry: critics and administrators, agents and awards – all arbitrary, but all-powerful. But then, as Kehlmann makes clear, so is art. Martin's response to Ruben's criticism is to abandon all hope. Script and laptop wind up in the retreat's lake.

For all we know, it might be a masterpiece. Kehlmann keeps both plays out of sight, and Ruben's motives – honesty, envy or spite – are never entirely clear. The point is, there's no knowing with art; as Hamlet says, thinking makes it so. If only Laurence Boswell's production extended the same ambiguity to the question of whether Benjamin and Gina actually cop off. Kehlmann's careful not to say, but giggles give them away. In a play that embraces impulse and contradiction, that's a shame. It closes down possibilities while arguing that art should open them up.

Instead, The Mentor reserves praise for the administrator (Jonathan Cullen), an amateur painter who expresses feelings on canvas. It might be naff, or it might be natural, unacknowledged brilliance, but it is at least honest and heartfelt. Polly Sullivan's smart design makes a motif of blossom – a measure of brief, beautiful new life.

Both script and staging are over-emphatic though. Not only does Kehlmann's situation play out predictably, it reveals too much of its meaning early on.

The pleasure is watching Murray Abraham toy with it. His playwright prowls through the play, a pride of lines. He delights in Ruben's pomp, making us wait an age for his verdict, before asking blithely, "What font do you use?" One of those actors who can make moments momentous, his underlying muscularity adds a much-needed volatility.

The one time Benjamin's self-awareness shows through his self-importance – "I was old at 25," he admits – his emotion gurgles to the surface then gets swallowed back down. It's like watching a toilet backing up. Perhaps that's all art is: all our sh*t expressed at random.

The Mentor runs at Theatre Royal Bath until 6 May.