Kolms Theory of the Liberal Social Contract:

Kolm starts from the basic idea of the autonomy of the individual, leading to the ethical right to the product of one's labour. This  autonomy also implies the right to give up (or exchange) rights. A set of right is legitimate if it follows from a transformation of  another legitimate set of rights and if the transformation itself was a legitimate process. Legitimacy follows from the voluntary  agreements (contracts) will not arise spontaneously in the market place for a number of reasons, which have nothing to do with  desires of the potential contractants. Obvious examples are the lack of information, the difficulty to control the free-rider problem in a situation with public goods, the problem of externalities, and the fact that one cannot draw a contract between persons who do not exist at the same time.  Basically all these reasons are related to the existence of transaction costs.  This makes relevant the role of the political process. It is a social process trying to achieve what direct free exchange could not do.  The Liberal Social Contract is  the name for the set of individual contracts and the principles itself.

A liberal social contract is a potential, putative, implicit, tacit and legitimate agreement. Kolm's theory takes into account the basic  tension between equality, efficiency and freedom and gives some new and interesting insights in this context.  He goes a long way in justifying social institutions, which redistribute income working within a libertarian, rights based framework. Kolm has introduced his  theory of 'fundamental insurance'.  It is a system of transfer towards the handicapped or those with lower earning capacity. 

Governmental intervention is required for the implementation and realization of contracts, which would have spontaneously appeared if there were no transaction costs.  In other words the role of the state is justified as a facilitator for the realization of social contracts in the event of existence of the resulting transaction costs in a world of imperfect information and costly transaction.