a play on
Does "Capitalist Realism is a play on Socialist Realism" in the following contexts mean "Capitalist Realism criticizes and lampoons Socialist Realism" or "Capitalist Realism is a new version of (imitates) Socialist Realism"?

Contexts:
1. The term "capitalist realism" has been used, particularly in Germany, to describe commodity-based art, from Pop Art in the 1950s and 1960s to the commodity art of the 1980s and 1990s. When used in this way, it is a play on the term "socialist realism". Alternatively, it has been used to describe the ideological-aesthetic aspect of contemporary corporate capitalism in the West.

2. However, as already noted, Richter and Polke’s Capitalist Realism was a far more reflexive and critical practice than its version in advertising. As Storr has observed, Capitalist Realism can be seen both as a play on Socialist Realism and as a lampooning of much of Pop Art’s seemingly uncritical embrace of consumerism: ‘it turns the tables on the eastern-bloc aesthetic dogmas in which Richter had been schooled, but it has an even more satirical effect when applied to the commercial culture of the West as a substitute for the label Pop.’

Question

a play on
Does "Capitalist Realism is a play on Socialist Realism" in the following contexts mean "Capitalist Realism criticizes and lampoons Socialist Realism" or "Capitalist Realism is a new version of (imitates) Socialist Realism"?

Contexts:
1. The term "capitalist realism" has been used, particularly in Germany, to describe commodity-based art, from Pop Art in the 1950s and 1960s to the commodity art of the 1980s and 1990s. When used in this way, it is a play on the term "socialist realism". Alternatively, it has been used to describe the ideological-aesthetic aspect of contemporary corporate capitalism in the West.

2. However, as already noted, Richter and Polke’s Capitalist Realism was a far more reflexive and critical practice than its version in advertising. As Storr has observed, Capitalist Realism can be seen both as a play on Socialist Realism and as a lampooning of much of Pop Art’s seemingly uncritical embrace of consumerism: ‘it turns the tables on the eastern-bloc aesthetic dogmas in which Richter had been schooled, but it has an even more satirical effect when applied to the commercial culture of the West as a substitute for the label Pop.’

Answer

Actually I would say it means something slightly different:

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The "play" is about the words, not their meaning (i.e. capitalism is not imitating socialism).

The phrase "play on words" is idiomatic and this is generally what is meant by "a play on". I can't think of an example where the meaning is any deeper (it might exist, I just cannot think of it).

EDIT: I just found an example: 
The name of the shop - "Strata Various" - is a play on words, because it sounds like Stradivarius, the famous violin maker. (Source: https://dictionary.cambridge.org/dictionary/english/play-on-words)

I don't think it always needs to be funny, even if this is most common.