Do they have the freedom to be be excluded, no

Well yes, they do. You can always declare yourself to be a one man community. That is why many of your "capitalist" ideas can survive in my socialism.

We would also then need to explore the legitimacy of such a contract imposed by a democracy which is majority rule. If 60% of a country voted for a socialist state that negates the voluntary will of the 40%.

I do want direct democracy and I dont think it has to always be the 'one way vs the other way' mentality. We should all work together on solutions to our problems and not just make them in our small groups and then let them compete. Sometimes this might be a good way but most often it is not.

I am also am for small governments, it is much easier to get a decision everybody in the small community is happy with. You can also talk about veto mandates for individuals and I want to make the exit of a community as "gentle" as possible, maybe he as a person can just make different contracts with the rest of the community?

Thank you for the friendly feedback and the lively and civil discussion!