Answer First we must understand what a theocracy is. Thearchy or theocracy is government by the immediate direction of God though his ministers and representatives.
When Christ comes to reign personally on the earth during the millennial era, a perfect theocratic government will prevail.
This perfect system of government was set up by Adam, and to a great extent by Abraham, Isaac and Jacob. Certainly ancient Israel in the days of Moses and the judges operated on a theocratic basis.
Man cannot operate such a government unless it is under the direction of God. All governments today are far removed from God and rely on their own wisdom.