Richter was born in 1932 in East Germany, but skipped West just before the Wall went up. The earliest paintings here are from the early 1960s. They already have the essential trick. They're copied from photographs, not observed from life. They raise our expectations of painted portraiture – of a human individuality and an artistic engagement with it – and then thwart them. They put our responses into short circuit. The artist is, in way, blind.
All Richter has before him is (normally) a black-and-white photo. All he is doing, with astonishing expertise, is transcribing it. His sources are holiday snaps, newspaper cuttings, photo-booth shots. He uses found photos or ones he has taken himself. His subjects are psychologically indifferent. The painting doesn't "touch" the real person.
The remotely famous, relatives and friends, familiar or unknown, nudes or Nazis, dead and alive, all are painted equally. The most blinding display here is the installation called 48 Portraits. It's a gallery of modern culture heroes – Wilde, Mann, Kafka, Stravinsky, etc. Here they are, these images of great faces, everyone utterly empty.
Richter's painting offers a fascinating spectacle – a spectacle of scepticism. It claims to know nothing. It is a way of painting after losing faith in painting. Painting cannot tell or show or make or grasp anything. It can only operate at a remove.
At the same time, Richter performs with ever greater virtuosity. He's a master of the blur. His transcriptions aren't sharp renderings. Typically, the image is brushed across in gentle sweeps, or dissolves in the softest focus. The technique is amazing, super-sfumato – and the subject is further lost. These veils of mist only amplify our sense that the world beyond the paint surface is indeed beyond us.
So that is the Richter effect. It can be mesmerising. It has won over two generations of painters, and I've gazed at it long in wonder myself. But finally the gaze becomes blank. Why?
It's partly to do with Richter's insistence that the world is quite beyond our imaginative grasp. This does not seem very wise. In fact, it's an altogether too "arty" attitude. And it's partly the way you feel the same about every Richter – about every bit of every Richter. You never want to say: look at how he does that, see what's going on there.
A Richter is brilliant, but it's uniform. It has no internal drama. Each part of a picture contributes equally to its total effect. And from picture to picture, that effect – the short circuit – is always the same. Powerful though this vision is, there comes a point where any way out is welcome.
Liz Arnold will never be taken for a master, but this British painter may well serve as a prompt or a pointer. She was born in 1964 and died, age 36, in 2001. She was one of her generation who was pushing away from the norms of transcription and quotation, and in favour of imagination and invention. A collection of her pictures is now on show at the Camden Arts Centre. They still look new.
To turn from a Richter to an Arnold reveals an absurdly glaring contrast. There's probably never been a time when the art of painting has embraced such different-looking things. Between these two kinds of work – in terms of subject matter, or how the paint goes on, or the colour vocabulary – there's more than disagreement: there's no communication at all.
An artist of the school of Richter could never say, as Arnold said, "I am pre-occupied by the fictional spaces inside paintings as self-contained parallel worlds. Places to explore the strangeness of a civilised, sophisticated species and its values. These other worlds may be in another solar system or they may be our world, magically altered..."
Creating fictions, inventing worlds, exploring them – that is anathema to the Richter way. The master himself has explained it thus: "The intention: to invent nothing – no idea, no composition, no object, no form – and to receive everything: composition, object, form, idea... By painting from photographs I was relieved of the need to choose or construct a subject..."
Arnold didn't paint her invented worlds quite from scratch. She had her own visual resources, and they are easy to spot: children's books, computer games, sci-fi graphics, cartoons. In other words, her imagery draws on places where story-telling and fantasy still survived, after they had left painting behind.
Her scenes enact alien landings. Creatures that belong in other pictorial contexts arrive in the strange new world of painting, and try to make themselves at home. In Mythic Heaven, a giant ladybird loafs with a cigarette, dreaming. Uncovered shows a humanoid green fly standing boldly in bra and panties. A red KFC chicken leg with pink human arms and legs loitering like a street-walker, a formless dark bug casting a shadow – these are the heroines of Arnold's scenarios.
It's important that they feel like paintings, not just painted illustrations, and they do. They have the freedom of painting's space. Urban skylines, with high-rises, industrial plants and polluted sunsets share ground with patterns of petals, twigs and toadstools.
Arnold's colours are luminous, saturated, simple, lurid. They're spread in wide, pure areas, or dotted in dense gatherings of bright points against blackness. There are pigments globs, and outbreaks of glitter among the paint. There is a general feeling of glut.
How seriously can you take it? Perhaps there's menace in her funny critters. Perhaps there's a suggestion of poison in the prettiness. Still, the feeling you may be getting is of something a bit too whimsical – in its A Bug's Life subjects, in its visuals – and I wouldn't deny that. It is the hardest thing to find the return journey to painting from imagination. There is a problem in believing in your own inventions. There is the saving impulse to fall back on playfulness.
But in another way, Arnold's work is exemplary. She performs more like a modern poet than a modern painter. Her work is not about developing a home style that will reliably generate one signature piece after another; it's concerned with coining a series of new one-offs. Inevitably, they will be hit and miss. But often enough her elements find a precise reaction. The ones that keep fantasy at bay seem the best, those whose stories are latent in their shapes – like The Thing From, with its meeting of giant shadow-bug, red wall and glowing lawn; or the even less explicit Untitled, a hedge of violet leaves cut out in darkness. That's a line she could have taken further, and others can.
Gerhard Richter, Portraits: National Portrait Gallery; every day until 31 May; admission £8, with concessions.
Liz Arnold: Camden Arts Centre, London NW3; until 19 April; closed Mondays; admission free
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