Propaganda, a word derived from New Latin in the seventeenth century, did not originally carry the negative associations with which we identify it today. Yet with propaganda there has always been an intent to "propagate," or, in more religious terms, to "proselytize"—that is, convert, persuade, and sometimes indoctrinate.
Propaganda is generally a means of transmitting the ideas and belief systems of political, religious, or other groups in an effort to affect the opinions of the wider public and to garner more support, as well as to combat counter-opposing forms of propaganda. But in the course of the twentieth century, when governments began utilizing their own mass propaganda to support their ideological agendas, the nature of propaganda as indoctrination became much more common. The state throughout history has always propagated ideology among its subjects, but with the development of mass communications in the nineteenth and twentieth centuries, propaganda as a systematic tool became common practice in governments' political strategy, in order to influence their and (in the case of war) other countries' populations.
In this sense, propaganda is essentially undemocratic, because it overvalues the government's position while undermining any others. But as previously stated, propaganda is merely a form of communicating ideas, whether or not those ideas contain some kind of agenda, and whether their intent is to suppress or liberate the ideas of the democratic body. So, any social group can propagate their ideas, without necessarily utilizing power to control the beliefs of the people at large.
It depends both on the democracy and propaganda in question. This is an important consideration because in theory, the citizens of the democracy in question shape the laws of the democracy through voting rights, which is essentially the definition of democracy - a system of government that gives power to the citizenship through voting. With that in mind, a citizenship could vote to completely outlaw propaganda, or vote to make it completely acceptable, and either would be considered democratic given it was established through the peoples’ vote.
Additionally, what is considered propaganda is up to interpretation. Although in more recent history propaganda has the connotation of use in authoritarian governments, propaganda is not exclusive to authoritarianism and can be used by any political entity to bias or influence the masses. The fact that information in propaganda is misleading and/or incorrect could be considered undemocratic, again depending on the democracy and the laws that democracy has determined around free speech rights, as propaganda would be considered a form of speech.
For example, in the United States there are only three forms of speech that are unprotected by law: child pornography, obscenity and fighting words/true threats. Speech that may fall into the latter two categories typically requires extensive legal review for free speech protections to be forfeited. Ultimately, quite a great deal of speech that would be considered unethical, immoral or misleading is protected by law in the United States. This differs in other democracies. For instance, it is illegal in Germany to deny the Holocaust occurred. In the United States, an individual has the legal right to deny the Holocaust. Thus, if the nature of the propaganda falls within the laws around speech rights, it could be considered democratic or undemocratic, even if the content might not be considered ethical, moral or societally acceptable.
Arguably, propaganda is antithetical to the basic principles of democracy. Ideally, in a democracy, people choose freely and each voice counts for one. Democratic leaders are elected by people on the basis of facts and a democracy is supposed to flourish because, through a voting system, the interests of one group is allowed to dominate, as would be the case in a monarchy or oligarchy. However, propaganda usually involves using a range of highly sophisticated techniques to convince people of a particular point of view. Consider, as a hypothetical, that someone uses highly persuasive propaganda against the system of progressive taxation and consider, further, that this is done in a nation with high income inequalities. Now it's fact that progressive taxation benefits the worst off. However, if the worst off end up being convinced by the propaganda, as is often the case with effective propaganda, they are likely to vote in the interests of whoever is responsible for the propaganda rather than in their own interests. Something like this defeats the very purpose of democracy. Thus, we can argue that propaganda has no place in a flourishing democracy.
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