Here is a brief overview of the political theory behind libertarian municipalism as defined by social ecologist Murry Bookchin. There is a distinct relationship between libertarian municipalism and anarchy. In fact, it could probably also be called deliberate anarchy, but anarchy is such a loaded word that a new term would avoid the connotation attached.
On Civil Ethics
Libertarian municipalism represents a serious, indeed a historically fundamental project, to render politics ethical in character and grassroots in organization. It is structurally and morally different from other grassroots efforts, not merely rhetorically different. It seeks to reclaim the public sphere for the exercise of authentic citizenship while breaking away from the bleak cycle of parliamentarism and its mystification of the "party" mechanism as a means for public representation. In these respects, libertarian municipalism is not merely a "political strategy." It is an effort to work from latent or incipient democratic possibilities toward a radically new configuration of society itself-a communitarian society oriented toward meeting human needs, responding to ecological imperatives, and developing a new ethics based on sharing and cooperation. That it involves a consistently independent form of politics is a truism. More important, it involves a redefinition of politics, a return to the word's original Greek meaning as the management of the community or polis by means of direct face-to-face assemblies of the people in the formulation of public policy and based on an ethics of complementarily and solidarity.
Means and Ends
Here, means and ends meet in a rational unity. The word politics now expresses direct popular control of society by its citizens through achieving and sustaining a true democracy in municipal assemblies -- this, as distinguished from republican systems of representation that preempt the right of the citizen to formulate community and regional policies. Such politics is radically distinct from statecraft and the state a professional body composed of bureaucrats, police, military, legislators, and the like, that exists as a coercive apparatus, clearly distinct from and above the people. The libertarian municipalist approach distinguishes statecraft -- which we usually characterize as "politics" today -- and politics as it once existed in precapitalist democratic communities.
Equally important is the need for confederation -- the interlinking of communities with one another through recallable deputies mandated by municipal citizens' assemblies and whose sole functions are coordinative and administrative. Confederation has a long history of its own that dates back to antiquity and that surfaced as a major alternative to the nation state.
Municipalizing the Economy
Full article found here
It remains to emphasize that libertarian municipalism is not merely an evocation of all traditional antistatist notions of politics. Just as it redefines politics to include face-to-face municipal democracies graduated to confederal levels, so it includes a municipalist and confederal approach to economics. Minimally, a libertarian municipalist economics calls for the municipalization of the economy, not its centralization into state-owned "nationalized" enterprises on the one hand or its reduction to "worker-controlled" forms of collectivistic capitalism on the other...
In such a municipal economy -- confederal, interdependent, and rational by ecological, not simply technological, standards -- we would expect that the special interests that divide people today into workers, professionals, managers, and the like would be melded into a general interest in which people see themselves as citizens guided strictly by the needs of their community and region rather than by personal proclivities and vocational concerns. Here, citizenship would come into its own, and rational as well as ecological interpretations of the public good would supplant class and hierarchical interests...
This is the moral basis of a moral economy for moral communities. But of overarching importance is the general social interest that potentially underpins all moral communities, an interest that must ultimately cut across class, gender, ethnic, and status lines if humanity is to continue to exist as a viable species. This interest is the one created in our times by ecological catastrophe. Capitalism's "grow or die" imperative stands radically at odds with ecology's imperative of interdependence and limit The two imperatives can no longer coexist with each other -- nor can any society founded on the myth that they can be reconciled hope to survive. Either we will establish an ecological society, or society will go under for everyone, irrespective of his or her status.