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. [...]

[...] Nixon's attempt to inflate his way out of crisis was not only directed at domestic problems. He was also effectively trying to export inflation, and reduce the real value of the US foreign debt [...]

[...] bond yields also have a massive impact on domestic interest rates. Domestic bands will lend to local enterprises only at rates competitive with what they can earn by investing their money elsewhere. If they are confident they can get 12 percent return on their money buying bonds, they are going to need a lot of convincing to lend to a local firm for less.

[...] during the crisis that led to the Volcker coup [...], US interest rates skyrocketed, and other nations had to follow suit, just to prevent international finance from dropping their currencies and bonds in favor of those of the US--and in the process killing non-US exchange rates and economies. So, with the Volcker coup, the rest of the world had to raise their rates to comparable levels, meaning the Fed's vicious recessionary monetary policy rapidly diffused across the globe.

One of the better-known results of this process was the Latin-American debt crisis. [...]

1. Liberalization (drop tariffs, subsidies, capital controls, export restrictins, etc.)
2. Privatization (sell state holdings, which in many cases are substantial)
3. Stabilization (allow currency to float at its "natural" [usually lower] exchange rate)

As this outline of the neoliberal policy package shows, neoliberalism is [...] a description of at least two powerful and intertwined contemporary economic dynamics: globalization and financialization. Neoliberalism can be understood as the historical conjuncture, and political legitimization (via both coercion and consent) of these two processes. Globalization is the integration of the international economy via trade. The original version of liberalism certainly involved globalization, but without the kind of financialization we have today with _neo_liberalism--or at least, back then, finance played a different and subordinate role as investor in productive enterprise.

[...] this definition of neoliberalism is helpful since it allows us to [...] understand the differences between what is sometimes called the "first era of globalization"--British free trade imperialism in the nineteenth century--and what we call globalization today (by which we mean something more specifically neoliberal).

[...] Neoliberalism is not just about getting rid of rules, or "deregulation." Removing tariffs, capital controls, currency pegs, restrictions on foreign ownership, and so forth are all essential elements of neoliberal regulatory programs, abolishing rules that limit firms' opportunity to maximize short-term returns. But states and firms and international institutions need not only to eliminate rules, they must also create new ones, imposing, extending, or deepening regulatory or legal structures where they were previously underdeveloped or nonexistent. For example, countries the world over have established intellectual property rights regimes for everything from medicinal plants to corporate logos, often where no such legal frameworks existed before. That is not deregulation by any stretch of the imagination. Jamie Peck and Adam Tickell were among the first to point out these complexities in "actually existing neoliberalism," which they label "roll-back" (deregulation) and "roll-out" (reregulation). Neoliberalism has always involved both.

[...] only an understanding of dynamics behind the 1970s crisis of capitalism can make sense of what has happened since in the realm of finance capital. We must reject the popular idea that the rise of finance (or any other economic change of the 1970s) is an unprecedented restructuring of innovation in economic dynamics, unrelated to what came before. Instead, we can only explain the drastic changes brought about by financialization--a central component of the phenomena associated with neoliberalism--if we put it in the context of the post-World War II economy in the developed world.

[...] Even in the "golden age" [...] the rate of profit was actually declining in the US. But "business sentiment" remained high until the late 1960s, as did the rate of investment, which suppressed the effect of falling profits.

[...] in the late 1960s, the rather slow fall in the profit rate accelerated markedly, and continued steadily until the Volcker coup of 1979-82. If you have to pick a birthday for neoliberalism, this is it. It had been gestating for a number of years, but more than any other single event, the Fed's interest rate shock (helpfully coupled with Reagan's assault on social services and unions) reasserted the doinance of capital in US political economic relations, and by extension throughout much of the developed north. It did so by restarting the profitability of very large corporations, the financial sector in particular. [...]

[...] with Volcker's interest rate hikes, which made investment too expensive for many businesses, everything slowed to a crawl. In combination with the political economic forces that caused problems for the welfare state (like increasing international competition and giving more power and voice to workers), these trends led firms to look for ways of making profit other than through Long Boom-style brick-and-mortar investment.

[...] Offshore capital flight continued throughout the late 1960s, 1970s, and early 1980s. Eurodollar markets exploded, abetted in particular by the diligent cultivation of the UK's Thatcher government, elected in 1979. The plan was to remake the UK as a centre of global finance capital, thereby re-establishing Britain's international political economic standing, which had waned considerably since World War II. Thatcher's government was explicitly interested in enabling "the City" (London's equivalent of Wall Street, which had thrown its considerable financial and organizational resources behind her election campaign) to steal some of New York's high-powered thunder.

To make this happen, the UK government's main effort, and its main achievement, was the radical deregulation of finance in the UK. [...]