The basic idea being discussed is very close to a "Guarunteed Minimum Income" ( http://en.wikipedia.org/wiki/Guaranteed_minimum_income ). Essentially, everyone regardless of work is supplied with a certain minimum, but with enough work they can earn far more than that minimum.
I do not believe it has ever been fully tried in practice (though a strong social safety net comes somewhat close in a piecemeal fashion). But there is no reason in principle it cannot work and some respected thinkers such as Thomas Paine have advocated it. There would be enough people motivated by a combination of the love of the job and the desire to earn more than the low-guarunteed minimum to ensure necessary societal functioned.
It may have some undesirable side effects, but in principle it could be made to work.
Edit: Slight edit for clarity.