@DarthAstrius This sounds like the way New England towns work, where each individual town is in charge of most of its own amenities (sometimes partnering with adjacent towns/regional groups) and makes policy decisions in town-wide assemblies held once or twice a year. It is a successful model for advancing sustainability, at least in my town and the ones around it.
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Given the lack of practical experience with it outside of places like Rojava, it is a bit hard to say how it would work out. But I could definitly see a hybrid of those ideas and digital citizen engagement tools like those pioneered in the municipality of Barcelona to be an interesting plot element in a Solarpunk story.
I am absolutely on the same page as you. I really don't think the system we have in the liberal representative 'democracies' deserve the title democracy, nor can democracy exist meaningfully at that scale.
Local politics, local direct action, and volunteering are always a step towards a better future, but that isn't enough without the structural changes you advocate.
I think that confederal municipalism is viable in the sense that, if set up correctly, it can work. Convincing more cetralised authorities to cede power is where it becomes difficult.