James had a short spell with Hart at City.
"Joe is better than Casillas," James said. "He is recognised as number one because he won the World Cup and European Championship and has been fortunate to be at one of the biggest clubs in Europe for years.
"But Joe's distribution is 10 times better than Casillas'.
"He makes all the saves, he takes all the crosses. He can do much more than Casillas.
"If Casillas was in the Premier League, he would struggle. Put him in Wolves' team. See how good he is then.
"Joe is head and shoulders above everyone else with England now and I would struggle to see a better goalkeeper in Europe."