This chapter traces the historical evolution of the term ‘democracy’ before discussing the debate between advocates of the protective theory and the participatory theory of democracy, asking whether it is possible to reconcile elitism with democracy and whether participatory democracy is politically realistic. It then examines democracy’s claim to be the ideal grounding for political obligation with particular emphasis placed on the problem of majority rule and what to do with the minority consequences of majoritarianism. Various contemporary challenges facing democracy are then discussed. The final section describes the new directions that democratic theory has taken in recent years, focusing on four theories: associative democracy, cosmopolitan democracy, deliberative democracy, and ecological democracy.