When dada artist Marcel Duchamp put his pissoir/urinal in a museum, it was meant to be a provocation to the idea of the museum and to the idea of art. Nowadays this sort of 'provocative' art has itself become ritualised and conventional. This is the premise of Swedish writer-director Ruben Östlund's new film, 'The Square,' winner of the Palme d'Or at Cannes last year. Another notion lurking just below the glossy surface of the film is that the work of art is to be found within daily life itself, in the possibilities of creative transformation in the everyday.

Such ideas jostle with one another in 'The Square,' an ideas-driven surreal satire on the contemporary art world and its attendant PR operations. In his research for the film Östlund visited many contemporary art museums and saw exactly the same in all of them – some neon lighting on a wall, piles of gravel – and all disconnected from anything outside the walls of the museums. 'The Square' depicts the gallery world as a self-aggrandising, sealed bubble that comments on the world from above while distancing itself from society's more troublesome aspects, aided and abetted by the excluding language of art theory.

The antihero of 'The Square' is Christian, played by Danish actor Claes Bang ('The Bridge'), a high-minded, socially responsible director of a contemporary art museum in Stockholm, the X-Royal (the city's actual Royal Palace). The museum is a glossy near-empty space for ideas-driven exhibitions, performance art and impenetrable talks by visiting star artists such as Julian (Dominic West channelling artist Julian Schnabel), whose interview is repeatedly interrupted by a man with Tourette's syndrome. One installation called 'Mirrors and Piles of Gravel' is exactly that. Accompanied by neon wording on the wall, 'YOU HAVE NOTHING,' it is meant to encourage visitors to reflect on how they relate to others outside the museum, as so-called 'relational aesthetics' insists. It is also the object of a perhaps too obvious joke involving cleaners.

However, it is not the sheltered facile-ness of the contemporary art museum scene that is Östlund's principal target. 'The Square' may not have the exocet-like accuracy of his 2014 'Force Majeure,' which skewered a husband and father who, in an instinctive act of cowardice, abandons his family in the face of an impending avalanche threat. But as with the high Alpine location of 'Force Majeure,' Östlund uses his museum setting to explore inequalities in supposedly liberal, enlightened societies, playing with our expectations about what is supposed to happen against what actually happens.

What drives much of the film's drama is a relatively new phenomenon in historically all-white Sweden – the specific local manifestation of white liberal guilt as experienced in a well-off self-consciously egalitarian society. Over the last two decades waves of immigrants have altered the face of Sweden's citizenry, giving rise to huge inequities, mistrust and fear more familiar in other parts of the West. Christian is currently overseeing a project that reflects his own earnestly liberal, enlightened concerns: a space called 'The Square,' where anyone entering is meant to abide by humanitarian values of equality of treatment and dignity for all: a radical space of trust and caring. Arrows point to pushbuttons labelled 'I trust people' and 'I don't trust people.'

Erection of 'The Square' has required toppling a huge traditional equestrian statue of a man on a horse, a dismantling that inadvertently smashes the man and the horse – a portent for the rest of the film. Soon other things go haywire. A public incident in the real town square, where Christian assists a hysterical women being pursued by a man, concludes with the realisation that he has been the victim of a scam (in a piece of performance art more ingenious than anything in his museum). His wallet and phone have been stolen in the incident.

Christian's find-my-phone app locates the phone somewhere in a block of flats in an insalubrious part of town. Since no specific flat can be pinpointed Christian hand-delivers threatening letters to every single flat, and soon receives back the stolen items. He immediately gives a large handful of money to the first refugee he sees begging, seemingly not recognising her as the ungrateful beggar whose earlier request for a sandwich 'without onions' was met – but not the condition. In the course of the film we learn that such prissy self-righteousness is one of Christian's fatal flaws.

There is fall-out in the shape of a small Arab boy whose family now believes their son to be a thief. He turns up at Christian's flat, accuses him of causing him grief and threatens to create 'chaos' for him if he does not exonerate him in the eyes of his parents. Distracted at work as a result, Christian fails to control two lean and hungry PR men eager to publicise the new exhibition: 'Your competition isn't other museums but natural disasters, terrorism and controversial moves by far-right politicians.' Unsupervised, they create a provocative YouTube video that goes viral. It shows a young blonde girl in rags clutching a teddy bear being blown up in the middle of 'The Square.'

Christian's professional downfall begins – a trajectory charted in terms of his complete inability to function adequately in everyday life, especially in relation to people on the downside of race, gender and class inequalities. Christian's liberal-sounding views about empathy, compassion and equality keep hitting the buffers whenever he interacts with real-life people, both in public and in his personal life with his kids and ex-wife. It becomes clear that the museum's own staff is diverse in name only when we witness the one female aide and one black aide stuck with low-grade tasks, directing visitors to exhibits, sorting out Christian's phone or being side-lined at a key meeting.

By the time Christian has the grace to feel shame at the young Arab boy's fate (being a man constantly undone by standing on his dignity and sense of entitlement) it is too late. His belated attempt to make amends and literally to salvage the situation fails because the family has left the building. A simple 'Sorry for being a dick' when it was needed would have done the trick.

Christian lives by compartmentalising his life, putting his high ideals in one box, his parenting in another, his sex-life in another. The last-mentioned includes a hilarious encounter with a very elastic condom. When Anne, a young journalist played by Elisabeth Moss ('The Handmaid's Tale') confronts him about their night together, their encounter is filmed against an installation of a giant pile of schoolroom chairs. The pile sways and rattles, constantly interrupting their conversation in a way that injects just the right degree of comedy into their excruciating conversation. This could be one of the more interesting performance works on show.

In an equally arresting scene, a stampede by posh museum donors towards dinner is halted when their temperamental chef yells 'Stop!' and proceeds to tell them meekly what is on the menu. The film may feel somewhat overstuffed with such gags, but some are very funny.

Christian does not see the contradiction between his tendency to abstraction and lack of connection to others, and his cherished 'relational aesthetics' which aspires to break down barriers between ordinary life and the isolated contexts in which art is traditionally displayed. In one telling vignette near the end, he seeks help from passers-by to guard his shopping bags while he collects his kids. When no one comes to his aid he commandeers the nearest, utterly bemused refugee beggar, totally trusting that he will still be there on the bench with his Cos and Armani bags when he returns. There could be no better illustration of the film's central themes of inequality, social blindness, trust – and entitlement.