From mutual agreement in exchange of goods and services, or by force. Not the same. Only thieves and governments do the latter.
Freedom of Contract is one of the most important concepts of free market capitalism. People must have the right to review the terms of contract, decide to sign or not and be held to the terms, and there should be penalties for breach on both sides and conditions for dissolution of the contract.
The "Social Contract" you are talking about is no contract at all. It is imposed by force, you are given no chance to sign, a false choice (red or blue!) and only 1/385millionth of a say in it. There is no remedy for breach and no conditions for dissolution. It is the very opposite of voluntary exchange and mutual agreement.
DO NOT conflate the two, or go back to whatever liberal arts school terribly educated you.
(If I repeat the word "wrong" a few more times, will it improve my opinion?)
The mistake of both libertarians and liberals in these loud arguments is that they focus on the top (national government) where the real social contracts start locally. If you start to build up a system of local social contracts; well, if it quacks like a government, it's a government, even if you'd rather call it a Homeowner's Association with Guns.
But please don't use "social contract", it's just a liar's word. It is neither social or contractual what people do under a "social contract". It is naked force: "Do what I say or I will hurt you".
Since you have a PhD, I'll assume that you are not so lazy you can't separate these things in your brain.
Democracy, augmented with some anti-majoritarian safeguards, is a reasonable way of organizing society on a basis that generally advances overall liberties, and social-contract theory provides a reasonable philosophical basis. Libertarian freedom-of-contract is essentially a right to indentured servitude with only the barest attention paid to anything resembling actual real-world liberty or genuine consent, and only people who are either primitivist hippies living in the woods, or malicious exploiters, promote it as a fundamental good. And also anyone who disagrees with this paragraph is dumb.
Anyway, technologue has a point in suggesting that the "social contract" is worthy of skepticism. And I, for one, will join him/her in rejecting the notion of nebulous implicit contracts of this type. When considering this, I'm reminded of what Thomas Paine said about the absurdity of the dead being able to bind the living.
It's the living that bind the living.
Specifically, previous but still-living generations. No one comes of age in a vacuum. If you inherit the benefits (or situations) of the previous generations, you don't just inherit the good stuff, you inherit the debts of the previous generation as well.
Looking way, way back, one can say that the first settlers in a given region might have formed a consensual contract, and the "social" contract is what each continuous generation inherits.
2. ???
3. Declare victory.
Check their comment history.
You are describing a universe which only exist in an imaginary island where all the Galts are living. "Freedom of Contract" works when there are one or two similar-sized parties involved, but it does not scale well beyond that. Try renting a car with a customer agreement tailored for your liking; or try negotiating custom EULA with vendor of whatever browser you are using to post your comments.
The term "social contract" means whatever the person using the term wants it to mean.
Not the same thing. At all.
For the vast majority of people, contracts provided by the market are an even worse false choice: Maslow's Hierarchy imposes needs on every individual, fixing the supply of labor at a lower bound which is empirically observed to lie far above the demand for it, thereby commoditizing the unskilled worker and coupling his salary to the minimum dictated by his Maslow needs rather than to the value he creates. The difference goes to his employer, and a non-governmental tax is exacted upon each of his purchases that is distributed to local capital-holders according to their wealth, exacerbating the imbalance in an exponential feedback loop. There is no remedy when his employer resorts to wage theft (frequently), because the justice system requires time and capital that he does not have to achieve the simplest forms of redress. There are conditions for dissolution, but he fears them, because written between the lines are an economic certainty that will dash him repeatedly against the rocky shores of unemployment and homelessness.
This is a laughable notion of consent. When did he agree to have Maslow's needs imposed upon him? When did he agree to abide by the rules of a game that systematically disadvantages him? When did he agree to initial conditions that give him far less than 1/400millionth of a share in economic power? This is the very opposite of what someone with a choice would have chosen.
The only things this hypothetical worker has going for him came from the government: minimum wage laws (and yes, I believe these are a good thing, since wages in commoditized labor markets tend towards the lower end rather than the higher end of the economically feasible range), worker safety standards, subsidized food and health care, education for his children, and so on. None of this is speculation: we can look to history to see what happened when government did not "intrude" on these areas of life.
[^1]: http://www.archives.gov/exhibits/charters/constitution_trans... see: preamble.
[edit] More directly to your point, it's irrelevant what anyone thinks is "letting" government "steal", the "thievery" is enabled by laws which are created by elected representatives, therefore "the people" (aka government) is directly responsible for taxation.
Democratic governments don't even enter into that frame of reference unless you want to have a governmental system where you elect a personal representative.
What about businesses that made their money from violations of treaties with the Native Americans? Or from contracts to organize the data necessary for the Holocaust?
What about the people who ended up with a leg up in life due to inheriting any of the ill earned wealth above?
Or do you write most if not all off as thieves?