Rooney has been struggling in front of goal for United this season and has only scored twice in the Premier League.
Fans have become increasingly vocal about Van Gaal's style of play and James, who played alongside Rooney for England, believes Van Gaal is mishandling the striker and it is wrong to suggest his the England captain is in decline.
He told Press Association Sport: "When you look at (Sir Alex) Ferguson at Manchester United, as much as the hairdryer keeps getting mentioned, the team leads the changing room more so than a manager.
"Wayne was allowed to be himself because however much he argued or (behaved) in his effervescent way around the changing rooms, his performances would justify his character.
"David Moyes comes back in, a bit more of an authoritarian, if you like; (Louis) van Gaal seems to be the same, therefore you're suppressing this enthusiasm.
"Wayne, at 30 years old, there's no reason why that old Wayne Rooney spark can't come back. It's not about him being reckless - it's about allowing him to have a bit more personality in his performance. Allow him to take the odd liberty.
"He can play his way back into form."
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