Marxism argues that the ruling class in any society uses ideology or false consciousness to control the masses. Ideology mystifies or clouds reality, making it difficult for the common people to see the truth: that they are being ruthlessly exploited by a ruling class that cares nothing about them.
One way the ruling class, according to Marxism, uses ideological mystification is by positing large and mostly false distinctions between people based on race and gender. The ruling class, Marxists argue, stays in power by dividing blacks and whites against each other, training whites to feel that it is better to be superior to blacks, no matter how oppressed they may be, than to be equal and not oppressed. Likewise, it divides men from women by encouraging men to see women as lesser and different from themselves. In a true socialist environment, blacks, whites, and women of the lower classes would realize they have many, many more commonalities than differences and unite against the rulers, rather than tearing each other apart.
The evil Iago could be seen, in a Marxist reading, as a symbol of ruling-class ideological lies and mystifications. Himself a racist and sexist, Iago wants to oppress blacks and women, most particularly Othello and Desdemona. (He is vindictive against Othello, but he also is clearly a racist in general.) Since there really is no difference between a black man like Othello and a white man, or between men and women (all women are not the oversexed whores Iago imagines them to be), Iago resorts to lies, manipulations, and insinuations, as well as pretending to be a friend of the people he wants to destroy, in order to achieve his goals.
Marxists would argue that Iago is an accurate figure of ruling-class deception. Like him, the ruling class pretends to be on the side of the very people it wants to destroy, cajoling these people, as Iago does Othello, into trusting that their motives are good. Like him, ruling classes try to use race and gender to divide people and cause them to destroy each other, as Othello destroys Desdemona. Like the oppressed classes, who will in the future see the light, rise up, and violently destroy the upper classes, so too does Othello, when he comes to a true consciousness of reality, kill Iago.