The 17-year-old has enjoyed a fruitful season for the Cottagers, scoring 16 goals and registering seven assists en route to the Championship playoff final.
Sessegnon did not secure a place in Southgate's 23-man squad for Russia, however, and Butcher believes that the talented teenager should have made the cut.
"I would have looked at Fulham wing-back Ryan Sessegnon," Butcher told BBC Sport. "He has had a fantastic season, albeit at a lower division.
"He is a player that excites you and he is in the Championship playoffs with the possibility of playing in the Premier League next year.
"I think he is one for the future. I would have put him in but Gareth Southgate is England manager and I'm not."
Butcher was part of England's 1990 World Cup squad that came within a penalty shootout defeat by West Germany of a first final appearance since 1966.