Sunday's elections in Chile will prove significant, regionally and globally. The centre-left candidate, Michelle Bachelet won nearly twice as many votes as her closest rival, Evelyn Matthei, of the governing rightwing Alliance for Chile. Bachelet, Chile's president from 2006 to 2010, will have to go through a second-round runoff in December but is expected to win. Meanwhile, a new generation of student leaders – most notably, 25-year-old Camila Vallejo, who helped lead Chile's student uprising in 2011 – has been elected to Congress as part of Bachelet's coalition. It is this younger generation that is set to radically transform the direction of the country. In doing so, they're breaking apart the dominant myths concerning the relation between politics and economics in the region – and in the world at large.

At the national level, the rightwing government of Sebastián Piñera is struggling to understand how, after four years of high growth, fiscal discipline and low inflation – which many would argue are the very measures of success – Chileans failed to award his party another term in office. Some commentators are already beating their chests at the apparent scandal of "irresponsible" Chileans voting the wrong way. Others argue that the conservatives "couldn't transform a successful government into political success".

The right's resounding defeat, however, isn't simply a case of its inability to tap into middle-class frustration. For some time now, many Chileans have been rejecting the very economic model that Piñera, Matthei and their supporters around the world continue to praise: that there may be change – a transition to democracy, the implementation of human rights, and so on – but only insofar as the "model" stays as it was before.

The "model" is what Chileans call both the economic and paternalistic establishment that emerged under Pinochet's dictatorship and the myth that underpins it – that nothing can change. The myth is based on the terror and violence following the violent overthrow of Salvador Allende in 1973, and the attempt to erase history and hope from minds and hearts.

Chileans, especially the young, have realised this. They have blown apart the message of good cheer, that if the economy is well, all is well. Their reasoning is clear: the economic model produces wealth for the benefit of the few and widespread unhappiness. In Chile, the wealthiest 5% earn 257 times more than the poorest 5%. Higher education is private and expensive. Parents are left with huge debts, and their children face impossible odds to start a family or envisage a hopeful future.

The Chilean youth have an agenda: free higher education and replacing the Pinochet-era constitution through a self-appointed popular assembly. Some also want renationalisation. However, the rebellion that exploded in Santiago in 2011 is not simply against this or that policy. This is a rebellion against historical compulsion – the idea that no matter what you do, nothing changes.

Vallejo has warned that this will not be a repeat of the same compromise-prone Concertación government, which won every election from the end of military rule in 1990 until Piñera came to power in 2010. A considerable percentage of voters responded to the students' call for a constitutional assembly. As the new generation of politicians is swept to power, the next step towards reform is given radical legitimacy.

For the region this means that just as the first wave of leftism may be reaching an impasse in Argentina and Venezuela, a second, more profound one is beginning in unexpected parts of Latin America: conservative Chile, ultra-conservative Colombia and moderate Brazil. For the world, this spells the end of the dogma that the economy determines people's consent rather than the other way around. It is the time of the people once again.