To answer that, you have to understand that Hobbes wasn't creating a contract. He was identifying what he saw in the society of his time. The idea is that we gather together and sacrifice some of our rights in order to protect ourselves. His view that life was "nasty, brutish and short" made him believe that our reason to enter into the social contract was that it was our only means to protect ourselves. The only other option was anarchy.
His theory set the stage for future philosophers, like Locke, Rousseau and Jefferson, who argued that yes, society is based on the contract, but that people sacrifice their rights for reason's beyond protection.
Hobbes idea of the contract laid the groundwork for representative government and modern democracy. I would argue that in the absence of people being able to successfully self-regulate, the social contract continues to be necessary for maintaining social cohesion. Living in anarchy is possible, but only if people can have respect for others and manage their own affairs without government interference, something that few people are prepared to do.
Hobbes had little to do with representative government. His idea was that without some sort of government, people would be reduced to fighting and killing one another because people, by themselves, can't live peacefully. There has to be an intermediary between the people. Thus the individual sacrifices freedom for security. In Hobbes view the only person who could successfully act as the intermediary was a king.
Of course Hobbes wrote during the time of the English Civil War and his ideas sprang from what he saw as the consequences of that period in history. He didn't know that government; kings, princes, lords what have you; didn't exist in prehistoric times. If he were correct in his assumption about the need for an intermediary, then how did Europe survive during the Neolithic era? At the time, there were farming hamlets and small villages all across the Continent. How is it they did not extinguish themselves in wars without end? For that matter, why is it that tribal groups were able to flourish without engaging in war without end?
The best thing you can say about Hobbes is that he had a pretty good handle on what happens when a people or nation plunge in to civil war, but you can't extrapolate from that and get a usable framework for the actions of people in general.
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