It has no prescriptive power, it was never intended to be a set of formulas that can then be used to generate "good music". Only to create a language to explain whats already there...
Personally, I think western music is stuck in a 12-tone-equal-temperament rut. It's not as if we've discovered all possible 12-TET music, but it's getting harder to find anything truly novel harmonically or melodically. (Timbre and rhythm are still good ways to innovate within 12-TET.)
Noting a neighboring comment, theory may not be necessary for composition, but some specific forms of composition may be prohibitively difficult without theory. I have musical colleague who composes multi part jazz harmonies for small to large ensembles. They are steeped in theory.
On the other hand, my spouse attended a seminar given by a fairly well known film composer. She asked him if he followed any particular school of theory, and he said no.
As far as composition-- I've had some encounters with talented musicians who get stuck putting together a song or electronic composition because "something just isn't sounding right." In those encounters, a process of elimination improved a chord/voicing that an understanding of fundamental music theory principles would have revealed without my help.
The problem is that without the fundamental understanding, it's nearly impossible to reverse-engineer such an improvement and deduce the general principle at work. Lacking that basic understanding makes one reliant on others just to figure out how to get the sounds out of one's head and into the air.
Said every carpenter, craftsman and artisan that was eventually replaced by machines. There's a place for both, but it seems silly to argue against the march of progress given where it's gotten us.
But as a musician/producer/composer I'd never want that anyway. Having studied many forms of music, I know that there is no "right" and so a proscriptive/predictive "theory" of music is not at all what we want. On the contrary, what is "right" in music comes from a long line of collective cultural reasoning. This is much more evident in the distinctions between the development of eastern and western music, each having their own "theory". Notably, eastern music has a lot lower emphasis on harmonic progression and tends to use different tuning, sometimes "perfect" tuning (something which western music must eschew to support flexible harmonic motion). This leads me to my thesis, that music theory is primarily descriptive in nature and there are many theories of music, driven by historical-cultural development.
Music "theory" should lie outside of the domain and concern of science. There are fields which address the human response and other scientific natures of this such as psychoacoustics, electrical engineering and signal processing, and mathematics. Music "theory" has in its view aesthetics which lie outside of the domain of science and is a tool for use in describing things which have been found pleasing aurally and culturally.