One of the more common paths this transition took--in Canada, the US, and the UK among others--had three basic steps:

1. [...] the government [...] tried to inflate and/or stimulate the way out of it [...] By the early 1970s, increasing inflation proved this tactic ineffective on its own.
2. By around 1972 or 1973 [...] they made inflation against the rules, via wage and price controls like those used during World War II [...] union commitments to reduce wage demands and employer commitments to keep prices from rising at such rapid rates. This did not work, and pleased no one.
3. In the mid- to late 1970s, the state gave up trying to please both sides, abandoned labour and small business, and embraced finance-friendly Chicago-style economic policy: jacking interest rates and slashing government spending.

The best known example of step 3is the so-called Volcker coup of 1979-83. Paul Volcker was appointed chairman of the Federal Reserve [...] at the end of Jimmy Carter's single presidential term, and remained through most of Reagan's term of office. The Volcker coup is best described as the use of US monetary authority to squash inflation no matter how many jobs, how many social services, or how much human welfare it cost. [...]