'I don't pay you to work here; I pay you so that you CAN work here.'
In my shallow experience, managing peers with The Agency and taking up paid and unpaid intern positions, money by itself doesn't motivate high performance. It will only motivate the quest for more money. A raise is only a raise for thirty days; after that, it's just your salary. We are motivated to perform when our work expresses who we are, when the business' goals are intrinsically meaningful to us, and we feel that we are valued as people, not simply as economic agents.
The problem is that money is a terribly strong motivator. By itself, money motivates the wrong people to do the wrong things in quest for more money.