Again with the missing punctuation; The intonation of Fish's voice in the chorus suggests that there should be a comma in there, and doing away with it does change the meaning of the phrase rather. Oh lordy, I am so unnecessarily pedantic.
Anyway, comma or no, "He Knows You Know" is all about drug trip paranoia. (Side note here; typing that last word, I just got that paranoia you sometimes get whereby you are convinced that a word you have spelled correctly looks completely wrong, and accidentally tried to verify my spelling on "dictonary.com". That was a pretty fabulous double display of irony, I thought.)
As such, it would probably be a much fit much better on Fugazi than Script For A Jester's Tear, where it feels a mite out of place, although not so much as to be particularly offputting. Had they, say, replaced it with "Market Square Heroes" on the debut and held it over for Fugazi, I think both albums would be improved, and it would have the added effect of giving the latter an actual viable single. Because, in spite of the decidedly non-universal lyrical theme and the rather claustrophobic tone of the song, it has a very basic verse-chorus-verse structure, and the repetition of the title and Rothery's guitar work gives it some pretty good hooks, all of which served to make this the band's very first appearance in the top 40 singles chart way back in '83 (at #35, lower than every one of their fairly numerous following appearances, fact fans).
Video: He Knows You Know
The official music video, which is rather wonderful, if perhaps a little derivative of The Wall. And lacking in the best moment of the album version of the song, where Fish finishes by calling someone up purely to yell "DON'T GIVE ME YOUR PROBLEMS!" and then hang up.