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"A Call for Judgment," a recent book by Bhidé of Tufts University, blasts the unregulated market of credit default swaps, which nearly brought down the global financial system back in 2008, as an example of bad—or worse, worthless—innovation.

“They don’t serve any social purpose. There was an ideology which was blind, and remains blind, to the inherent defects of these products," he says. "Their capacity to blow up long after they’ve been introduced is huge. Liquidity in the market might be better, but there’s a blindness to this tradeoff.”

Clayton Christensen, a Harvard business school professor who made the best-seller lists with his book, "The Innovator’s Dilemma," says financial engineering is a cancer that’s been growing for the past two or three decades.

“Now it’s just epidemic,” he says. “The core problem is financial professors at business schools who have helped the financial community at large to begin defining profit in ways that are synthetic and not real.”

Those synthetic profits aren’t creating the jobs real profits would and are also stifling innovation, Christensen says. “It’s people who think they can redefine finance in order to generate more profitability that’s not real," he says. "As long as they can keep deceiving each other, they can keep making money.”

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