The alternative is bartering. The goods produced by one individual may not be desirable by another, especially if the person produces an non-physical or specialty goods Bartering for high value items becomes difficult (e.g. I'll trade 3000 bread for your car is unlikely to work)
There is no evidence that intrinsic motivation is wholly absent. Admittedly, the larger part of society do not experience intrinsic motivation, because it is hard to find. Extrinsic motivation, through the use of money, has merely become to path of least resistance in terms of finding motivation.
The will to survive is not enough to drive progress. Money provides motivation to improve society, not merely maintain it. In order to improve society, an intrinsic motivator needs to be established e.g. As society improves, people will have to work less overall and everyone has more free time.
Currency is a motivational tool for people to get rewards for their hard work. If someone doesn't get any reward for their work, why should they do it? Human brains work on a reward system, and money becomes a learned motivator so it therefore becomes motivation if money is a reward for a task.
That conception of rewards and punishments is simplistic. Rewards can be much more nuisanced, such as the satisfaction of improving the quality of society or developing one's self. These intrinsic motivators are much more effective and contribute more to one's overall wellbeing.