Large-scale generative language and vision-language models (LLMs and VLMs) excel in few-shot in-context learning for decision making and instruction following. However, they require high-quality exemplar demonstrations to be included in their context window. In this work, we ask: Can LLMs and VLMs generate their own examples from generic, sub-optimal demonstrations? We propose In-Context Abstraction Learning (ICAL), a method that builds a memory of multimodal experience from sub-optimal demonstrations and human feedback. Given a task demonstration that may contain inefficiencies or mistakes, a VLM abstracts the trajectory into a generalized program by correcting inefficient actions and annotating cognitive abstractions: causal relationships, object state changes, temporal subgoals, and task-relevant visual elements.