There's a good TED talk about having people work for self-satisfaction and the results it yields. To very quickly sum it up, they say that when people are allowed to do what they want, innovation happens.
Google allows its employees to work 20% of their time on any project they want. Those projects ended up becoming things like GMail and Adsense.
Another example is wikipedia, and how it's now the first place people check for information. Again, something that's maintained for free by the public. And something that I'm sure companies like Microsoft (Encarta) paid employees to do years ago.
I'm sure more companies would love that kind of output. But I'm with you, I work for money. And these companies are not doing anything to earn my "free labor"!