That's where class analysis becomes important. Every state is a democracy for the class that holds power in society, and capitalist states are democracies for the capital owning class. As Lenin famously put it:

In capitalist society, providing it develops under the most favorable conditions, we have a more or less complete democracy in the democratic republic. But this democracy is always hemmed in by the narrow limits set by capitalist exploitation and consequently always remains, in effect, a democracy for the minority, only for the propertied classes, only for the rich. Freedom in capitalist society always remains about the same as it was in the ancient Greek republics: freedom for the slave owners.