Ah! What an interesting question.
I guess there are differences between having boundaries and limits of acceptable behaviour and controlling people.
In very simplistic terms, the use of extrinsic motivators encourages people - and not just children - to conform to the wishes of the authority figure in order to receive rewards or avoid punishment. It doesn't really promote the development of the ability to judge what is right and act accordingly. Schooling, and education more broadly, should - I think - concern itself with the development of well-rounded individuals capable of discerning for themselves what is right and what is wrong and acting on their own conscience.