Liverpool have been heavily linked with a British record transfer for the 25-year-old, who is understood to be keen on making the move.
Carragher, who spent his entire playing career at Anfield, previously voiced concerns about a potential move, especially considering the arrival of Hugo Ekitike.
James seemingly agrees, with the ex-goalkeeper saying that Liverpool “don’t need” to sign the impressive Sweden international.
Speaking at the launch of Final One Standing by William Hill, James said: “Liverpool don’t need Alexander Isak to win the Premier League. It’s possible for a team to be blessed with too many riches – and it can end with disappointing results.
“I know it’s important not to attach too much importance to pre-season fixtures, but Liverpool look like a well-balanced side full of confident players.
“If they were to sign Isak, one immediate benefit would be that it would significantly weaken Newcastle. But that’s not the difference between winning the Premier League or not – it wouldn’t make them any stronger favourites than they already are.”