Homo economicus: the concept that we’re all rational and narrowly self-interested (inevitably embedding the idea that this is somehow a good thing):

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

Obviously, it’s not only economists who’ve made a point of looking at things from the self-interest angle.

Related to this is the idea of Rational Expectations Theory:

This is the proposition that people behave as if they have a perfect prediction of the economy’s future path, and therefore they collectively fulfil that prediction.

The above quote is from the Knowing and Making blog. Which goes on to say:

In addition, we can surely expect economic actors to learn over time. One reason that Keynesian deficit spending may have appeared to work from the 1930s to 1950s but fail by the 1970s is that people learned of the existence of inflation, and started to demand pay rises to match it. Prior to the 20th century inflation barely existed. Even until the 1950s – outside of Weimar Germany and a few other special cases – significant inflation was not considered an important risk. Now it’s a basic part of all macroeconomic calculations.

Rational expectations, therefore, are only likely to account for the phenomena that we have learned so far. What new phenomena might lurk in our future?

The degrees of recursiveness this implies in Economics is startling. I don’t know why I’ve never seen this before.

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